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3  i>i5  •  rn/i  / 


58th  Congress,  )  SENATE.  j  Execi 

Special  Session,  f  (A. 


PANAMA  CANAL  TITLE. 


MESSAGE 

FROM  THE 

PRESIDENT  OF  THE  UNITED  STATES, 

TRANSMITTING 

THE  OPINION  OF  THE  ATTORNEY-GENERAL,  UPON  THE  TITLE 
PROPOSED  TO  BE  GIVEN  BY  THE  NEW  PANAMA  CANAL  COM- 
PANY TO  THE  UNITED  STATES. 


March  12,  1903. — Ordered  to  lie  on  the  table  and  to  be  printed  for  the  use  of  the 

Senate. 


To  the  Senate: 

In  response  to  the  resolution  of  the  Senate  of  the  11th  instant,  1 
transmit  herewith  a  copy  of  the  opinion  of  the  Attorney-General 
on  the  title  proposed  to  be  given  by  the  New  Panama  Canal  Company 
to  the  United  States. 

Theodore  Roosevelt. 

White  House,  March  12,  1903. 


Department  of  Justice, 
Washington,  D.  C,  March  12,  1903. 
Sir:  In  response  to  the  resolution  passed  by  the  Senate  yesterday 
in  executive  session  I  have  the  honor  to  transmit  to  you  herewith  a 
cop}T  of  the  opinion  of  the  Attorney-General  on  the  title  proposed 
to  be  given  by  the  Panama  Canal  Company  to  the  United  States. 
Very  respectfully. 

J.  K.  Richards, 

Acting  Attorney-  G<  nt  ral. 

The  President. 

in 


OPINION 


OF  THE 


ATTOENEY-aENEEAL 


UPON 


THE  TITLE  PROPOSED  TO  BE  GIVEN  BY  THE  NEW  PANAMA 
CANAL  COMPANY  TO  THE  UNITED  STATES, 


October  25,  1902. 

The  President, 

Washington^  D.  C. 

Sir:  The  act  of  Congress  of  June  28,  1902,  entitled  "An  act  to  pro- 
vide for  the  construction  of  a  canal  connecting  the  waters  of  the 
Atlantic  and  Pacific  oceans,"  having  authorized  you  to  purchase  the 
rights  and  property  of  the  New  Panama  Canal  Company  of  France 
and  to  construct  a  canal  across  the  Isthmus  of  Panama,  in  case  you 
should  find  that  a  satisfactory  title  can  be  given  to  the  United  States 
by  the  company,  and  certain  arrangements  made  with  the  Republic 
of  Colombia,  with  an  alternative  provision  as  to  what  is  known  as  the 
Nicaragua  Canal  route,  I  have,  by  your  direction  and  to  enable  you 
to  perform  the  first  part  of  the  duty  so  imposed  upon  you,  made  an 
examination  of  the  title  proposed  to  be  given  by  the  company,  and 
respectfully  submit  my  opinion  thereon. 

To  make  this  more  intelligible,  I  think  it  well  to  premise  a  brief 
summary  of  the  history  of  the  company,  of  its  relations  with  another 
Panama  canal  company  of  France,  and  of  the  negotiations  and  prepa- 
rations which  have  been  set  on  foot  looking  to  a  sale  to  the  United 
States. 

In  1878  a  contract  of  concession,  which  has  since  been  renewed  from 
time  to  time,  was  entered  into  between  the  minister  of  foreign  affairs 
of  the  Republic  of  Colombia  and  Lieut.  Lucien  Napoleon  Bonaparte 
Wyse.  In  the  same  }^ear  it  was  approved  by  a  law  of  Colombia. 
This  contract  of  concession  (see  Exhibit  C)  describes  Lieutenant 
Wyse  as  a  member  and  delegate  of  the  committee  of  direction  of 
the  civil  International  Interoceanic  Canal  Company,  presided  over 
by  (Jen.  Etienne  Tilrr,  and  the  acceptance  of  Lieutenant  Wyse  was 
in  the  name  of  that  company.  The  concession  was  of  the  exclu- 
s  ve  privilege  to  excavate  across  the  territory  of  the  Republic, 
and  to  operate  for  ninety-nine  years  from  its  completion,  a  mari- 
time canal  between  the  Atlantic  and  Pacific  oceans.  The  canal  was 
to  be  completed  and  opened  to  public  use  writhin  twelve  years 
after  the  date  of  the  "  formation  of  the  universal  anonymous  com- 
pany which  shall  be  organized  to  construct  it,"  and  the  executive 
power  of  the  Republic  was  authorized  to  extend  this  time  six  years, 
in  case  it  should  be  found  impossible  to  finish  the  canal  within  twelve 
years.  The  public  lands  necessary  for  the  excavation  of  the  canal  and 
for  the  construction  of  a  railroad,  if  it  should  be  found  convenient  to 
construct  one,  were  granted,  the  lands  to  return  to  the  Republic, 

3 


4 


PANAMA  CANAL  TITLE. 


together  with  the  canal  and  railroad,  at  the  expiration  of  the  conces- 
sionary period.  There  was  also  granted  a  strip  of  land  200  meters 
wide  on  each  side  of  the  canal;  also  500,000  hectares  of  public  lands, 
with  the  mines  that  might  be  in  them,  to  be  selected  by  the  company. 
The  canal  was  to  be  neutral,  a  maximum  of  charges  was  fixed,  and  the 
Republic  was  to  receive  certain  annual  payments  of  money  during  the 
life  of  the  concession.  The  concessionaire  was  authorized  to  make 
an  arrangement  with  the  Panama  Railroad  Company,  and  there  were 
other  details  favorable  to  the  concessionaire,  Colombia,  and  the  general 
public  which  might  use  the  canal. 

This  contract  of  concession  was  by  its  terms  transferable,  but  was 
absolutely  forbidden  to  be  ceded  or  mortgaged  in  any  way  to  a  foreign 
nation  or  government. 

The  concession  was  transferred  by  the  concessionaire  on  July  5, 1879, 
to  M.  Ferdinand  dc  Lesseps,  founder  of  the  Universal  Company  of  the 
Interoceanic  Canal  of  Panama,  hereinafter  referred  to  as  the  "old 
Panama  Canal  Company.'1  This  company  began  the  work  on  the 
canal  and  continued  it  until  1888,  when,  after  the  expenditure  of  a 
vast  amount  of  money,  it  became  involved  in  financial  difficulties  and 
was  placed,  in  February,  by  the  civil  tribunal  of  the  department  of 
the  Seine  in  France  (see  Exhibit  H)  in  charge  of  a  Liquidator,  who  was 
authorized,  among  other  things,  to  contribute  or  turn  over  the  assets 
to  a  new  company,  the  organization  of  which  was  then  contemplated, 
and  which  will  be  referred  to  hereinafter  as  the  44  New  Panama  Canal 
Company." 

On  December  26,  1890,  a  law  of  Colombia  (Exhibit  C)  granted  to 
the  liquidator  of  the  old  Panama  Canal  Company  a  prorogation  of  ten 
years  for  the  completion  of  the  canal,  providing  as  a  condition  that 
he  should  transfer  the  whole  of  the  assets  of  the  company  in  liquida- 
tion to  a  new  company,  which  was  to  undertake  the  completion  of  the 
work,  and  that  the  new  company  should  be  organized  with  a  sufficient 
capital,  and  should  recommence  the  work  of  excavation  not  later  than 
February  28,  1893.  This  new  law  confirmed  the  contract  of  conces- 
sion of  1878,  and  provided  for  the  receipt  by  the  Colombian  Govern- 
ment of  10,000,000  francs  and  50,000  shares  in  the  proposed  new 
company. 

A  law  of  Colombia  of  1892,  by  article  1,  authorized  the  executive 
authority  to  modify  the  contract  of  December,  1890,  between  the  minis- 
ter of  foreign  affairs  and  the  liquidator,  concerning  the  prorogation 
for  the  opening  of  the  canal,  and  by  article  2  authorized  the  executive 
to  extend  the  time  for  constituting  the  proposed  new  company  and 
recommencing  the  work,  and  provided: 

If  the  Government  does  not  make  use  of  the  authorization  given  by  article  1  of  the 
present  law,  it  is  fully  empowered  to  make  a  new  contract,  which  will  not  require  to 
be  approved  by  Congress. 


PANAMA    (ANAL  TITLE. 


5 


The  Executive  made  a  contract  in  which  ;i  greater  time,  viz.  until 
October  31,  1894,  was  allowed  for  constituting  the  new  company  and 
beginning  the  work,  and  it  was  therein  declared  that  the  term  of  ten 
3rears  mentioned  in  the  prorogation  of  L890  should  begin  upon  the 
organization  of  the  company.  The  time  for  the  beginning  of  the  ten 
years  had  not  been  specifically  mentioned  in  the  law  of  1890.  No  sub- 
sequent law  of  the  Colombian  Congress  on  the  subject  has  been  found. 

The  new  company  was  constituted  definitively  on  October  2<».  1M»4. 
(See  Exhibit  J.)  This  would  accordingly  make  the  ten  years  end  in 
October,  1901. 

The  Executive  power  of  Colombia,  in  April,  1900,  undertook  to  grant 
to  the  New  Panama  Canal  Company  a  further  extension  of  six  years 
from  October,  1901.    (See  Exhibit  C.) 

After  the  judgment  of  the  civil  tribunal  of  the  Seine  of  February  1, 
1889,  appointing  a  liquidator  of  the  old  Panama  Canal  Company  and 
authorizing-  him,  among  other  liquidation  proceedings,  to  contribute 
to  the  projected  new  company  the  assets  of  the  former,  the  liquidator 
continued  the  w  ork  of  the  canal  as  liquidator,  entering'  into  arrange- 
ments for  that  purpose  with  the  contracting  companies  which  had 
been  engaged  in  excavating,  until  the  formation  of  the  new  company 
in  1894,  when  he  entered  into  a  contract  of  contribution  with  the 
founders  of  that  company  to  turn  over  the  assets. 

This  contract  took  the  form  of  stipulations  in  the  by-laws  of  the 
New  Panama  Canal  Company,  articles  5,  etc.  (Exhibit  1.)  These 
articles  declared  that  the  liquidator  contributed  to  the  new  company 
all  the  rights  which  had  resulted  for  the  company  in  liquidation  from 
the  laws,  decrees,  and  other  acts  of  the  Government  of  Colombia;  all 
the  works,  plants,  workshops,  buildings,  hospitals,  materiel,  etc., 
belonging  to  his  company;  all  the  plans,  drawings,  studies,  and  docu- 
ments of  all  kinds  concerning  the  construction  or  operation  of  the 
canal;  the  beneht  of  all  contracts  with  third  persons;  all  guarantee 
funds  on  deposit;  the  whole  to  be  the  property  of  the  new  company. 
The  articles  also  contributed  a  large  majority  of  shares  of  stock  in  the 
Panama  Railroaij  Company,  a  New  York  corporation,  which  shares 
had  been  purchased  by  the  company  in  liquidation;  but  this  last  con- 
tribution was  conditional;  that  is  to  say,  should  the  canal  be  duly  com- 
pleted it  was  to  remain  good,  but  should  the  canal  be  attempted  and 
partly  constructed  by  the  new  company,  but  not  completed  within  the 
time  allowed  by  the  concession,  the  shares  were  to  return  to  the  liqui- 
dator; and  should  the  new  company  vote  not  to  attempt  the  construc- 
tion of  the  canal,  or  vote  to  raise  money  for  that  purpose  but  fail  to 
get  it,  then  an  indemnity  of  20,000,000  francs  was  to  be  paid  to  the 
liquidator  and  the  railroad  shares  to  belong  to  the  new  company. 

This  contract  of  contribution  stipulated  in  favor  of  the  liquidation 
of  the  old  company  60  per  cent  of  the  net  profits  of  the  enterprise, 


6 


PANAMA  CANAL  TITLE. 


and  this  was  to  be  reduced  to  50  per  cent  if  the  canal  should  not  be 
attempted  and  if  the  unconditional  title  to  the  railroad  shares  should 
be  acquired  by  the  new  company  in  the  manner  that  has  just  been 
explained.    (See  Exhibits  L  and  I.) 

The  rights  as  to  the  railroad  shares  were  to  remain  inalienable  by 
the  New  Panama  Canal  Company  until  payment  of  the  20,000. 000 
francs  or  the  complete  construction  of  the  canal  within  the  time 
allowed  by  the  concession.  There  was  also  reserved  to  the  liquidator 
the  right  to  a  commission  of  inspection  to  examine  the  proceedings 
of  the  new  company. 

In  the  interval  between  the  appointment  of  the  liquidator  in  1889 
and  this  contract  of  contribution  of  October,  1894,  divers  suits  were 
brought  against  the  liquidator,  which  were  the  more  embarrassing 
because  of  the  legal  character  of  the  old  Panama  Canal  Company. 
He  accordingly  applied  to  the  French  Parliament  for  a  special  law  to 
regulate  the  liquidation  of  the  company,  and  such  a  law  was  passed 
on  July  1, 1893.  (Exhibit  B.)  This  law  will  be  frequently  referred  to 
hereinafter. 

In  the  course  of  raising  funds  the  old  Panama  Canal  Compan}'  had 
issued  a  great  number  of  bonds  of  different  kinds.  (See  Exhibit  13.) 
The  last  issue  before  the  company  went  into  liquidation  was  an  issue 
of  what  have  come  to  be  knowrn  as  "lottery  bonds"— that  is  to  say, 
bonds  which  were  also  in  a  sense  lottery  tickets.  These  were  author- 
ized by  another  special  law  of  France  of  June  8,  1888.    (Exhibit  F.) 

Of  the  money  received  from  the  subscribers  of  these  bonds,  namely, 
360  francs  each,  the  old  Panama  Canal  Company  took  300  francs  and 
60  francs  were  turned  over  to  another  company,  to  be  invested  and 
to  provide  both  a  sinking  fund  to  reimburse  the  bonds  from  time  to 
time,  and  in  the  meantime  to  furnish  funds  to  pay  the  prizes  of  the 
lottery.  This  company  is  still  in  operation.  Its  members  are  the 
subscribers  to  the  lottery  bonds  themselves.    (Exhibit  13.) 

Another  special  law  of  France  after  the  dissolution  of  the  old  Pan- 
ama Canal  Company  authorized  the  liquidator  to  issue  some  of  the 
same  lottery  bonds. 

The  bonds  in  his  hands  unissued  were  not  among  the  rights  con- 
tributed by  him  to  the  New  Panama  Canal  Company. 

Ti:e  latter  compan}T  resumed  the  work  on  the  canal  immediately 
upon  organizing  itself,  having  taken  in  a  cash  capital  of  60,000,000 
francs,  subscribed  b}T  divers  persons,  including  some  of  the  old  con- 
tractors, some  of  the  bondholders  and  stockholders  of  the  old  company 
and  some  outside  persons;  and  has  continued  the  work  until  the  pres- 
ent time. 

The  liquidation  of  the  old  Panama  Canal  Company  has  likewise  con- 
tinued under  the  special  law  of  July  1,  1893,  concerning  it. 

In  1901  the  question  of  a  purchase  of  the  rights  and  property  of  the 
New  Panama  Canal  Company  by  the  United  States  was  much  discussed 


PANAMA  CANAL  TITLE. 


7 


in  France  and  the  United  States,  and  on  January  9,  1902,  an  official 
oiler  (see  Exhibit  T)  was  made  by  the  officers  of  that  company  to  sell 
to  the  Government  of  the  United  States  all  the  property  and  rights  of 
the  company  on  the  Isthmus  of  Panama  and  its  archives  in  Paris,  for 
$40,000,000. 

This  offer  had  been  authorized  by  vote  of  the  general  meeting  of 
stockholders  of  the  company  (see  Exhibit  T),  and  the  liquidator  and 
the  official  representative  (called  the  "  mandataire")  of  the  bondhold- 
ers of  the  old  Panama  Canal  Company  whose  appointment  had  been 
provided  for  by  the  special  law  of  July  1, 1893,  announced  their  consent 
to  the  sale  in  formal  proceedings  in  the  civil  tribunal  of  the  Seine,  by 
which  that  law  required  all  acts  of  the  liquidator  tending  to  alienate 
the  assets  of  the  old  company  to  be  approved. 

The  civil  tribunal  of  the  Seine  approved  such  consent  of  the  liquida- 
tor by  a  judgment  of  March  19,  1902.    (Exhibit  1.) 

A  division  of  the  $10,000,000  between  the  new  company  and  the 
liquidator  was  settled  by  arbitration,  and  the  submission  by  the  liqui- 
dator of  this  matter  to  arbitration  was  approved  b}^  another  judgment 
of  the  civil  tribunal  of  the  Seine,  dated  August  2,  1901.    (Exhibit  O.) 

One  of  the  bondholders  of  the  old  Panama  Company,  a  M.  Donna- 
dieu,  went  into  court  and  asked  the  civil  tribunal  of  the  Seine  to  set 
aside  and  annul  its  own  judgment  approving  the  consent  of  the  liqui- 
dator to  the  sale  to  the  United  States  and  questioning  the  new  com- 
pany's right  to  sell;  but  the  tribunal,  by  judgment  of  July  3,  1902 
(Exhibit  5),  decided  that  he  had  no  right  of  action,  because,  under  the 
special  law  of  1893,  he  was  represented  for  such  purposes  by  the 
mandataire  of  the  bondholders,  and  that  he  had  no  right  to  question 
the  power  of  the  New  Panama  Canal  Company  to  sell,  having  no  legal 
relations  with  that  company. 

This  judgment  was  confirmed  upon  the  same  reasons  given  below, 
by  judgment  of  the  court  of  appeals  of  Paris  of  August  5,  1902. 
(Exhibit  6.) 

For  convenience  in  pursuing  the  investigation,  all  objections  known 
to  have  been  stated  in  Congressional  debates  and  elsewhere  to  the 
satisfactory  character  of  the  title  proposed  to  be  given  by  the  new 
Panama  Canal  Company^  to  the  United  States  were  formulated.  (Ex- 
hibit 1.)  These  were  in  the  same  terms  communicated  to  the  officers 
and  lawyers  of  the  company,  in  order  that,  while  the  investigation 
was  pursued  and  the  conclusions  herein  stated  reached  independently 
of  them,  they  might  draw  up  and  submit  whatever  they  saw  fit  by  way 
of  comment  upon  those  objections.  The}^  have  recently  handed  me  a 
legal  opinion  or  brief,  a  translation  of  which  is  among  the  papers 
hereto  annexed.    (Exhibit  2.) 

In  addition  to  taking  that  step  we  have  obtained,  independently  of 
them,  a  special  stenographic  report  of  the  oral  arguments  made  in  a 


8 


PANAMA  CANAL  TITLE. 


recently  decided  case  in  the  court  of  appeals  of  Paris,  in  which  the 
sale  of  the  canal  property  was  opposed  by  one  Donnadieu,  as  already 
mentioned.    (Exhibit  6.) 

The  objections  referred  to,  except  the  last,  which  is  that  Congress 
authorized  a  purchase  only  from  the  new  company  and  not  from  the 
old,  whereas  it  is  alleged  that  the  property  has  become  again  that  of 
the  old  company,  resolve  themselves  into  reasons  in  support  of  the 
following  propositions: 

1.  That  the  new  company  has  not  power  to  sell  the  canal  and  rail- 
way property. 

2.  That  the  liquidator  has  not  power  to  consent  to  such  sale. 

3.  That  the  French  courts  have  not  power  to  authorize  the  liquida- 
tor and  new  company,  or  either  of  them,  to  enter  into  the  sale. 

4.  That,  at  all  events,  the  United  States  would  take  the  property  as 
a  trust  fund  subject  to  the  total  obligations  to  the  stockholders,  bond 
holders,  and  the  other  creditors  of  both  companies. 

It  will  be  convenient  to  examine  the*  law  bearing  upon  these  four 
propositions  in  their  order: 

I.  The  first  is:  That  the  new  company  has  not  power  to  sell  the 
canal  and  railway  property. 

This  requires  a  brief  statement  of  the  history  and  nature  of  such  a 
company,  in  view  of  the  law  of  France. 

Our  conceptions  of  charters  and  corporations  and  privileges  enjoyed 
by  corporations,  as  well  as  the  notion  of  their  being  unable  to  act  beyond 
the  abilit}7  infused  into  them  by  their  charters,  are  here  very  mislead- 
ing, but,  notwithstanding  this,  there  are  abundant  conceptions  belong- 
ing to  our  system  which  can  enable  us  to  understand  these  French 
associations. 

There  once  existed  in  France  concerns  similar  to  our  corporations, 
taking  their  character  from  royal  and  feudal  institutions,  but  it  is  to  be 
remembered  that  France  passed,  more  than  a  century  ago,  through  a 
revolution  in  which  almost  everything  of  that  kind  was  destroyed  as 
though  hj  fire. 

It  was  one  of  the  acts  of  the  French  Revolutionary  Convention  to 
declare  "the  liberty  of  industry." 

The  New  Panama  Canal  Company  is  an  anonymous  partnership  or 
association,  composed  of  shareholders  (Societe  Anom-me  par  Actions), 
which,  in  view  of  its  object,  is  of  a  noncommercial  or  nontraflScking 
kind,  but  subjected  by  a  law  of  August  1,  1893,  to  an  act  concerning 
commercial  associations  passed  in  1867,  and  to  the  Commercial  Code 
and  the  customs  of  commerce.  All  anonymous  associations  formed 
since  August  1, 1893,  are  subject  to  the  same,  and  are,  legally  speaking, 
commercial,  though  in  fact  not  so. 

The  old  company  is  an  anonymous  partnership  which  voluntarily 
took  the  form  of  an  anon}Tmous  association  of  shareholders,  but  is  not 
ruled,  and  never  was  ruled,  by  the  law  of  1867  or  the  code  and  customs 


PANAMA  CANAL  TITLE. 


9 


of  commerce,  but  only  by  the  Civil  Code,  having  been  formed  before 
August  1,  1893,  and  not  being  commercial  in  its  object  or  business. 

Anonymous  associations  or  partnerships  have  not  the  names  of  the 
partners,  but  a  name  merely  descriptive  of  their  object  or  business. 

The  essential  or  fundamental  nature  of  both  companies  is  that  of  vol- 
untary partnership,  as  we  understand  that.  The  powers,  accordingly, 
are  those  which  an  individual  Frenchman  has  under  the  general  rules 
of  law — an  individual  merchant  corresponding  to  the  new  company, 
and  an  individual  who  is  not  a  merchant  to  the  old  company.  As  an 
individual  can  sell  what  belongs  to  him  to  whomsoever  he  pleases 
(unless  some  third  person  has  a  claim  such  as  properly  warrants  him  in 
opposing  the  sale  in  order  to  subject  the  property  to  a  debt  owing  to 
him,  or  the  like),  so  one  of  these  associations,  of  either  kind,  can  ordi- 
narily dispose  of  its  property. 

In  the  case  of  commercial  associations  proper,  to  which  the  new 
company,  the  one  we  are  now  considering,  has  been  assimilated  and 
added  by  the  general  law  already  referred  to  of  August  1,  1893,  the 
legislature  of  France,  in  view  of  the  usually  large  capital  and  the  great 
number  of  stockholders,  bondholders,  and  other  creditors,  has  imposed 
a  few  restrictive  rules  (act  of  1867  and  amendment  of  August  1,  1893, 
Exhibit  3)  for  the  greater  security  of  the  partners  and  of  third  per- 
sons, requiring  publication  of  the  by-laws,  a  certain  amount  of  stock 
to  be  represented  at  certain  stockholders'  meetings,  the  paying  up 
of  subscriptions,  etc. ;  but  these  do  not  change  the  essential  character 
of  the  concerns  as  partnerships;  do  not  establish  an}^  tie  between  them 
and  the  Government,  or  any  obligations  from  them  to  the  Govern- 
ment, and  do  not  forbid  the  exercise  of  the  liberty  to  dispose  of  the 
property  of  the  concerns  as  freely  as  an  individual  is  able  to  dispose 
of  his,  if  no  special  law  forbids  and  if  he  is  solvent  and  not  under  some 
particular  contractual  or  other  like  obligation  to  retain  the  property. 
This  new  Panama  Company  is  quite  solvent. 

The  act  of  1867  already  referred  to  provides,  in  section  21,  the  first 
section  under  the  title  of  "Anonymous  associations,"  as  follows: 

21.  In  the  future,  anonymous  associations  may  be  formed  without  authorization 
by  the  Government.  They  can,  whatever  may  be  the  number  of  the  associates,  be 
formed  by  a  document  of  a  private  character  ("  sous  seing  prive  " )  made  in  duplicate. 
They  are  subject  to  the  provisions  of  articles  29,  30,  32,  33,  34,  36  of  the  Code  of 
Commerce  and  to  all  provisions  contained  in  this  title. 

Lyon-Caen  and  Renault,  Treatise  on  Commercial  Law,  sa}r  that— 

The  law  of  23d  of  May,  1863,  modified  the  Code's  requirement  of  the  authorization 
by  administration  to  the  extent  of  exempting  from  the  requirement  associations  hav- 
ing a  capital  exceeding  20,000,000  francs  *  *  *  the  law  of  1867,  which  has 
repealed  the  law  of  1863,  has  not  set  anonymous  associations  free  to  constitute  them- 
selves and  to  perform  their  functions  as  they  may  see  fit.  In  the  interest  of  stock- 
holders and  third  persons  it  has  imposed  some  rules  (articles  41,  42,  47)  which,  from 
the  nature  of  things,  are  much  the  same  as  those  that  same  law  has  established  for 


10 


PANAMA  CANAL  TITLE. 


associations  of  commandite  par  action.  The  legal  regulation  of  the  two  kinds  of 
societies  par  actions  (that  is  to  say,  having  stock)  has  thus  become  the  same  in  this, 
that  since  then  neither  of  them  is  submitted  to  a  previous  authorization  or  to  the 
surveillance  of  the  administration,  but  they  enjoy  only  a  liberty  regulated  by  the  law. 

In  a  judgment  of  July  19,  1899,  the  civil  tribunal  of  the  Seine,  in 
deciding  a  controversy  between  the  liquidator  of  the  old  Panama  ( Jom- 
pany  and  the  company  formed  in  1888  to  take  care  of  the  so-called 
lottery  bonds,  discussed  the  different  situation  of  a  civil  association 
formed  before  1893,  such  as  was  the  old  Panama  Company,  and  that 
of  a  more  recent  association,  and  held  that  the  civil  association  for 
taking  care  of  the  bonds  did  not  "come  under  the  control  of  the  law 
of  July  24,  1867,  which  applies  only  to  commercial  associations. 
*  *  -x-  Xhat  it  is  the  Civil  Code  alone  which  rules  the  civil  associa- 
tions to  determine  the  rights  and  suits  of  those  interested,  whatever 
form  those  civil  associations  may  have  taken  in  order  to  constitute 
themselves;  that  the  agreement  shown  by  the  by-laws,  accepted  by 
all  and  by  the  company  of  Panama  itself,  is,  therefore,  the  law  of  the 
parties;  that  it  has  been  observed  in  the  calling  and  in  the  composi- 
tion of  the  extraordinary  general  meeting  of  July  25,  1898,  which, 
consequently,  can  not  be  criticised  from  this  point  of  view." 

Put  we  are  at  present  discussing  the  power  of  the  new  company  to 
sell,  and  it  would  seem  to  follow  from  what  has  been  said  that  it  has 
the  power,  just  as  an  individual  would  have  power  to  sell  his  property, 
unless  some  special  statute  has  forbidden  this  or  made  it  unlawful, 
since  it  is  a  solvent  company  without  bondholders,  as  appears  from  its 
annual  reports  hereto  appended.  (Exhibit  N.)  It  is  essentially  a 
partnership,  subject  to  a  few  statutory  regulations  about  entirely  dif- 
ferent matters. 

It  has  been  suggested,  however,  that  its  contractual  obligation  to 
the  old  company  to  pay  60  per  cent  of  the  earnings  of  the  canal 
restrains  it.  And  this. may  well  be  true;  but  this  contractual  obliga- 
tion of  a  partnership  is  the  same  as  though  an  individual  had  agreed 
to  complete  the  canal  and  to  pay  the  60  per  cent,  and  is  therefore 
such  an  obligation  as  can  be  released  hy  the  other  contracting  party. 
If  so  effectually  waived  by  the  other  contracting  party,  no  one  else 
could  complain  or  question. 

Being  a  merel}T  contractual  obligation  of  a  private  partnership  for 
the  benefit  of  another  private  concern,  there  is  no  principle  of  law 
which  would  make  the  new  company  unable,  with  the  consent  of  the 
other  contracting  party,  to  make  use  of  its  liberty  to  dispose  of  what 
belongs  to  it.    There  is  no  lack  of  power,  or  vires. 

Whether  from  the  point  of  view  of  the  bondholders  and  other  cred- 
itors of  the  old  company,  and  the  power  of  the  liquidator,  it  is  just 
and  lawful  for  him  to  set  free  the  new  company  is  a  question  to  be 
separately  discussed  hereinafter. 


PANAMA  CANAL  TITLE. 


11 


It  has  also  been  suggested  that  the  so-called  lottery  bond  law  of  lsss, 
providing — 

Akt.  3.  All  machinery  necessary  for  the  accomplishment  of  the  work  shall  he 
made  in  France.    The  raw  materials  shall  he  of  French  origin — 

is  a  special  Law  containing,  by  some  implication,  a  prohibition  to  the 
new  company  to  sell  to  one  who  could  not  be  expected  to  be  subject 
to  such  provisions  of  law,  or  else  subjecting  any  purchaser  of  the 
property  of  the  new  company  to  those  provisions,  so  that  he  would 
be  bound  to  proceed  accordingly. 

It  has,  besides,  been  supposed  (but  enough  has  been  said  to  indicate 
the  error  of  that)  that  this  law  of  1888  is  proof  that  the  Government 
of  France  is  represented  by  or  bound  up  with  companies  generally 
in  such  a  way  that  the  express  consent  of  that  Government  is  neces- 
sary to  authorize  an}'  sale  of  the  whole  of  its  property  by  the  new 
company. 

This  law  was  purely  exceptional,  intended  to  give  an  unusual  right 
to  the  old  company  in  the  matter  of  issuing  bonds,  which  are  in  effect 
lottery  tickets  also,  lotteries  having  been  prohibited  in  France  by  a 
law  of  1836. 

The  Government,  as  a  compensation  to  the  nation  in  general  for 
permitting  this  unusual  thing,  required  the  company  so  specially 
privileged  and  benefited  to  use  French  machinery  and  materials.  But 
in  view  of  the  general  relations  of  the  Government  to  these  free  part- 
nership associations,  it  would  be  going  a  long  distance  to  see  in  this 
an  order  intended  to  be  addressed  to  any  individual  or  other  purchaser 
of  property  from  the  company  which  was  thus  given  the  benefit  of  the 
unusual  privilege,  and  still  more  to  deduce  a  mortgage  or  a  lien 
attaching  to  any  property  it  might  sell  into  whosesoever  hands  it 
might  come. 

The  French  legislature  by  act  of  1889 — the  company  having  dis- 
solved and  ceased  to  require  to  any  great  extent  machinery  and  raw 
materials — passed  another  law  authorizing  the  liquidator  to  issue  some 
of  the  unsold  bonds;  but,  of  course,  as  bonds  of  the  old  company,  which 
still  existed  for  the  purposes  of  liquidation,  and  providing  that  in 
case  the  liquidator  should  transfer  or  cede  its  assets  to  a  company 
organized  for  finishing  the  canal,  the  new  company  should  not  issue 
the  bonds  which  might  at  that  time  remain  unsold  otherwise  than  on 
the  conditions  determined  b}r  the  law  of  June,  1888,  concerning  the 
minimum  of  the  selling  price  and  the  payment  of  interest. 

But  the  new  company  has  remained  a  stranger  to  the  lottery-bond 
scheme.  It  has  not  enjoyed  the  privilege  of  issuing  those  bonds;  the 
still  unissued  bonds  have  been  retained  by  the  liquidator  and  were  not 
contributed  by  him  to  the  new  company,  and  they  are  no  part  of  what 
it  is  now  proposed  to  sell  to  the  United  States. 


12 


PANAMA  CANAL  TITLE. 


The  nature  of  the  provisions  of  law  concerning  materials  and 
machinery  is  such  that  the  requirement  to  obtain  these  in  France  was 
not  in  any  way  to  benefit  the  bondholders  or  any  other  specific  indi- 
viduals, or  even  the  French  Government  itself,  but  the  peoole  of 
France  indefinitely. 

The  expected  benefit  was  a  vague  and  indefinite  one,  reserved 
by  the  Government  as  compensation  for  something  which  the  now- 
proposed  purchaser  would  not  get,  viz,  the  privilege  of  issuing  lottery 
tickets  as  an  inducement  to  a  loan  the  company  had  already  a  right  to 
get;  and  only  the  Government  of  France,  which  is  acquiescing  in 
the  proposed  sale,  with  a  full  knowledge  that  the  foreign  purchaser 
would  not  think  of  going  to  France  for  his  materials,  could  ask  that 
such  materials  and  machinery  should  be  purchased  in  France.  No 
bondholder  or  stockholder  or  creditor  can  ask,  or  could  possibly  desire 
to  ask,  that  that  order  burdening  the  old  company  should  be  transferred 
to  a  purchaser.  It  seems  to  be  clear  that  no  request  from  the  French 
Government  will  be,  or  could  justly  be,  made;  and  further,  that  if,  by 
the  law  of  1888,  the  legislature  intended  to  say  that  any  remote  pur- 
chaser of  property  from  a  free  partnership  concern  must  be  a  person 
subject  to  the  laws  of  France,  or  that  no  sale  to  a  foreign  company  or 
concern  could  be  made,  the  legislature  used  no  word  to  express  that 
idea.  The  United  States  will  not  be  a  French  successor  of  this  French 
company,  enjoying  French  privileges  and  bound  by  French  law,  but  a 
foreign  purchaser  of  property  belonging  to  it  in  a  foreign  country. 

It  may  be  remarked,  in  passing,  that  so  far  from  the  canal  project 
and  undertaking  being  those  of  the  Government  of  France  as  a  Gov- 
ernment, it  is  clear  that  the  concession  by  Colombia  was  made,  not  to 
France,  but  to  private  persons  and  a  private  company,  and  that  the 
concession  itself  forbids  the  belief  that  Colombia  was  willing,  at  the 
time,  to  make  the  concession  to  or  for  any  foreign  government.  The 
canal  is  not  in  France,  but  in  Colombia.  It  is  not  built  in  pursuance 
of  the  governmental  obligations  of  France  to  provide  highways  in 
France  for  the  French  people.  It  is,  in  short,  a  canal  of  great  public 
interest  in  Colombia,  which  fact  led  Colombia  to  declare  it  a  work  of 
public  utility,  so  as  to  authorize  the  private  concessionary  to  make  use 
of  what  we  call  the  right  of  eminent  domain,  or  forcible  expropria- 
tion of  private  property;  but,  as  far  as  the  nation  and  Govern- 
ment of  France  are  concerned,  it  is  a  canal  in  a  foreign  country 
partially  constructed  by  a  private  French  concern  in  the  nature  of  a 
free  partnership. 

France  could  have  prohibited  the  French  private  company  from 
selling  to  outside  persons  or  concerns,  if  it  desired  to  retain  the  benefit 
of  the  purchase  of  materials  in  France,  but  France  can  not  make  laws 
directly  binding  either  outside  persons  or  property  in  Colombia  after 


PANAMA  CANAL  TITLE. 


13 


it  ceases  to  be  owned  by  Frenchmen.  However,  France  passed  do 
such  law,  and  such  companies,  as  we  have  shown,  arc  left  by  her  as 
free  to  sell  what  they  own  either  to  Frenchmen  or  foreigners  as  indi- 
vidual Frenchmen  are. 

But  it  is  not  sufficient  to  show  that  there  rests  in  the  New  Panama 
Canal  Company,  or  in  its  associates  or  stockholders,  somewhere,  the 
right  to  make  this  sale,  or  divest  themselves  of  their  rights  in  favor 
of  a  new  concessionary  of  Colombia,  so  far  as  their  powers  under  the 
law  of  France  are  concerned. 

It  is  still  necessary  to  know  that  the  "general  meeting"  of  stock- 
holders, so  called,  which  has  authorized  the  oiler,  reserving  the  right 
to  itself  to  ratify  the  sale,  has  the  power  to  so  offer  and  ratify  that 
sale,  and  that  it  is  not  necessary  to  have  unanimous  action  by  the 
shareholders. 

The  "general  meeting"  of  stockholders  receives  its  powers  from 
the  by-laws,  and  the  by-laws  are  made  by  the  original  stockholders  or 
founders.  It  should  always  be  kept  in  mind,  in  this  connection,  that 
they  arc  partners  who  have  associated  upon  certain  terms,  and  that 
a  partnership  agreement  can  not  be  changed  by  less  than  all  of  the 
partners. 

Sometimes  the  by-laws  {statuts)  delegate  authority  to  the  "general 
meeting"  to  alter  those  by-laws  in  certain  specified  particulars.  When 
that  is  done  the  general  meeting  is,  as  it  were,  both  a  constitutional 
convention  and  a  legislature  of  the  association. 

The  Government  of  France,  prior  to  1867,  authorized,  through  the 
executive  administration,  the  b3r-laws  of  commercial  associations,  to 
which  the  New  Panama  Company,  created  in  1894,  has  been  assimila- 
ted b}T  the  act  of  August  1,  1893;  but,  as  1  have  said,  from  1867  only 
certain  very  general  regulations  were  prescribed  b}r  statute,  and 
otherwise  the  founders  were  left  free  to  make  such  bv-laws  as  they 
saw  tit. 

There  is  nothing  in  the  act  of  1867  or  the  amendment  of  1893  for- 
bidding the  most  extensive  powers  to  be  conferred  by  the  by-laws  of 
tlu4  founders  upon  the  general  meeting. 

On  the  contrary,  the  authors  already  quoted  (same  volume,  sec.  861) 
say  that  the  question  is  much  discussed  whether,  in  the  absence  of  any 
delegation  of  power  by  the  by-laws — i.  e.,  when  they  are  silent  on  the 
subject — the  general  meeting  has  not  this  power  of  alteration.  They 
say  it  is  pointed  out  that  if  "unanimity  among  the  stockholders  is 
required,  alterations  of  the  most  necessary  character  to  the  carrying 
on  and  development  of  the  association  will  be  rendered  difficult,  even 
impossible."  They  say  that  it  is  also  claimed  that  in  the  general  meet- 
ings, which  have  to  deal  with  questions  concerning  a  collective  person- 
ality, there  should  be  power  to  lay  down  the  law,  because  the  persons 


14 


PANAMA  CANAL  TITLE. 


composing  the  association  have  renounced  their  individual  rights  In 
favor  of  the  collective  interest.    They  add.  however: 

We  think,  on  the  contrary,  that,  in  the  absence  of  a  formal  clause  in  the  by-laws, 
alterations  in  them  can  not  be  made  except  with  the  unanimous  consent  of  the  share- 
holders. 

It  happens  that  the  by-laws  of  the  New  Panama  Canal  Company  arc 
not  silent,  but  expressly  give  very  extensive  powers  to  the  general 
meeting"  which  proposes  to  make  the  sale.  Title  9  of  those  by-laws 
(Exhibit  I),  under  the  heading  "Amendments  to  the  by-laws  -Liqui- 
dation/' has  the  following: 

Art.  60.  If  experience  shall  show  the  expediency  of  modifying  or  adding  to  the 
present  by-laws,  the  general  meeting  shall  proceed  to  do  that  in  the  manner  set  forth 
in  articles  61  and  (52  hereof. 

It  may  especially  decide  in  regard  to  a  reduction  of  the  capital  stock;  a  reduction 
of  the  fixed  duration  of  the  association,  an  extension  of  it,  or  an  earlier  dissolution  of 
the  association;  its  fusion  with  other  associations;  it  may  even  effect  all  and  any  modi- 
fications bearing  upon  the  object  of  the  association  without,  however,  altering  its 
essence. 

Art.  63.  In  case  of  the  dissolution  of  the  company,  the  general  meeting,  on  the 
proposal  of  the  council  of  administration,  determines  the  method  to  be  adopted  for 
liquidating  or  for  the  constitution  of  a  new  company;  it  appoints  the  Liquidator  or 
liquidators,  and  can  give  them  the  most  extensive  powers. 

Articles  61  and  02  referred  to  contain  merely  details  (taken  from 
the  regulations  of  the  act  of  1867)  as  to  the  composition  of  a  general 
meeting  capable  of  carrying  out  article  60. 

It  would  be  a  violation  of  article  60  to  use  the  funds  of  the  associa- 
tion to  build  a  canal  in  Spain.  That  would  essentially  alter  the  objec  t 
or  business  to  be  carried  on. 

The  general  meeting  thus  has  the  power  to  anrend  or  add  to  the 
by-laws  in  any  way  not  altering  the  business  to  be  carried  on,  and 
therefore  to  adopt  bv-laws  giving  itself  or  the  president  or  council  of 
administration  any  powers  concerning  the  sale  of  the  assets  that  it 
sees  fit  to  give. 

Having  all  the  powers  of  the  shareholders,  with  the  single  exception 
above  mentioned,  I  do  not  see  that  a  resolution  directly  authorizing  or 
ratifying  the  sale,  if  published  in  the  manner  required  for  amend- 
ments of  the  by-laws,  would  be  contrary  to  any  law,  violative  of  any- 
one's rights  or  in  excess  of  the  powers  given  to  the  general  stockhold- 
ers' meeting  by  the  by-laws  above  quoted. 

This  great  power  was  property  conferred  by  the  founding  partners 
because  of  the  impossibility  of  getting  together  for  unanimous  con- 
sent the  hundreds  of  thousands  of  partners. 

II.  The  next  of  the  four  propositions  is — 

2.  That  the  liquidator  has  not  the  power  to  consent  to  such  sale. 
This  involves  somewhat  more  complex  problems,  but  they  do  not 
seem  to  be  difficult  of  solution 


PANAMA  CANAL  TITLE. 


15 


It  might  be  sufficient  to  sa}7  that  the  civil  tribunal  of  the  Seine 
given  by  the  general  law  and  the  special  act  of  July,  L893,  jurisdiction 
of  the  persons  and  subject-matter,  and  being  what  we  should  call  a 
court  of  general  jurisdiction,  has  decided  that  the  liquidator  has  the 
power  to  consent  to  the  sale,  and  that  the  court  of  appeals,  upon  the 
appeal  of  the  only  person  who  presented  himself  or  claimed  to  have 
presented  himself  within  the  time  and  manner  allowed  by  that  special 
law,  has  decided  against  him  on  appeal. 

He  has  a  right  (during  a  period  of  two  months,  now  running)  to  ask 
the  Court  of  Cassation  to  nullify  the  judgment  on  appeal,  which  held 
that  even  he  had  not  presented  himself  in  due  time  and  manner  and 
that  he  had  no  right  of  action,  even  if  he  had  been  in  time.  But  in 
view  of  the  objections  which  I  have  mentioned  in  the  beginning  of 
this  paper,  it  may  be  well  to  explain  the  validit}7  of  the  judgment  or 
decision  that  the  liquidator  has  the  power  to  consent  to  the  sale,  its 
conformity  with  French  law,  its  reasonableness,  and  its  effects  with 
regard  to  the  stockholders,  bondholders,  and  other  creditors  of  the 
old  company. 

What  is  this  liquidator  and  what  are  the  powers  of  such  liquidators? 

The  Civil  Code,  which,  as  we  have  seen,  regulates  the  affairs  of  such 
civil  companies,  contains  very  little  with  regard  to  their  liquidation 
or  winding  up,  and  almost  nothing  in  restraint  of  the  liberty  of  the 
partners.  (See  title  9,  "Of  the  contract  of  association.")  It  is 
almost  wholly  confined  to  the  general  rights  and  relations  of  indi- 
viduals. It  contains  nothing  about  corporations  or  joint-stock  compa- 
nies or  other  artificial  and  privileged  concerns.  Its  provisions  about 
the  "contract  of  association"  contemplate  a  mere  voluntary  partner- 
ship instead  of  a  statutory  or  artificial  body  in  which  the  stockholders 
have  a  limited  liability,  and  apply  to  any  and  all  free  partnerships. 
They  should  be  read  in  the  light,  first,  of  the  freedom  of  contract; 
and,  secondly,  of  the  principle  that  third  persons  can  be  bound  by 
ample  notice  of  the  nature  of  the  freely  made  partnership  with  which 
they  may  deal.  As  the  authors  already  quoted  say,  there  is  nothing 
in  the  Civil  Code  or  elsewhere  to  forbid  (see  sees.  1077-1082)  a  mere 
partnership  from  taking  the  form  of  a  commercial  association  and  let 
ting  the  world  know  that  its  private  contract  of  association  or  part- 
nership contemplates  a  limited  liability.    These  authors  say: 

We  believe,  on  the  contrary,  that  the  law  of  1867  [which  contemplates  limited 
liability  of  commercial  associations]  rules  noncommercial  associations  as  it  does 
commercial  associations  having  stockholders,  though  constituted  before  the  law  of 
August  1,  1893. 

We  have  seen,  however,  that  the  civil  tribunal  of  the  Seine  has  held 
that  it  does  not,  and  those  authors  themselves  say  that  the  greater 
number  of  judicial  decisions  are  that  way. 

But  it  is  recognized  by  these  authors,  and  in  the  decisions  of  the 


16 


PANAMA  CANAL  TITLE. 


civil  tribunal  of  the  Seine,  that  the  hanhruptcy  laws  and  the  laws 
concerning  the  statutory  institution  known  as  "judicial  liquidation" 
have  no  application  to  the  noncommercial  associations  constituted 
before  August  1, 1893,  and  that  the  question  of  their  liquidation  is  left 
altogether  to  the  Civil  Code. 

The  Civil  Code,  in  turn,  leaves  it  to  the  will  of  the  proper  tribunal, 
and  to  the  general  provisions  of  law  applicable  to  individuals,  and 
especially  to  individuals  in  the  case  of  succession  after  death.  About 
the  only  express  provisions  in  the  Civil  Code  on  the  subject  are  the 
following  articles: 

1871.  The  dissolution  of  associations  having  terms  [of  duration]  can  not  be 
demanded  by  one  of  the  associates  before  the  expiration  of  the  terms  unless  upon 
just  grounds,  as  where  one  of  the  associates  has  failed  to  live  up  to  his  engagements, 
or  where  an  habitual  infirmity  renders  him  incapable  of  attending  to  the  affairs  of 
the  association,  or  in  other  similar  cases,  the  legitimacy  and  importance  of  which 
are  left  to  the  determination  of  the  judges.    (Civ.,  1184-1865. ) 

The  rules  concerning  partition  of  successions,  the  form  of  such  partitions,  and  the 
obligations  which  result  therefrom  among  the  coheirs  apply  to  partitions  among 
associates.    (Civ.,  792,  815  et  seq.,  826;  Code  Procedure,  966  et  seq. ) 

The  liquidation  or  ordinary  winding  up  of  commercial  associations 
formed  after  1867  is  equally  unregulated  by  statute,  since  it  is  neither 
settlement  by  bankruptcy  proceedings  nor  settlement  by  what  is  tech- 
nically "judicial  liquidation."    The  authors  quoted  say-  (sec.  412): 

It  is  not  only  from  the  syndic  [in  bankruptcy  proceedings]  that  the  liquidator  of 
an  association  differs,  it  is  also  from  the  judicial  liquidator  named  in  virtue  of  the 
law  of  March  4,  1889. 

And  in  section  361  they  say: 

The  Code  of  Commerce  (art.  64)  supposes,  it  is  true,  an  association  in  liquidation 
where  it  speaks  of  associates  who  are  not  liquidators.  Article  61  of  the  law  of  24th 
July,  1867,  also  expressly  mentions  liquidation.  But  no  French  statute  has  defined  the 
state  of  liquidation,  nor  established  the  rules  to  govern  it;  jurisprudence  (that  is,  judicial 
decision)  has  had  to  supply  that  omission,  drawing  inspiration  from  the  general  principles 
of  law  and  the  necessities  of  practice. 

It  appears  that  the  matter  of  liquidation  or  winding  up  being  left 
thus  to  the  courts,  they  have,  in  a  general  way,  followed  the  same  plan 
for  civil  or  nontrading  associations  voluntarihr  constituted  in  commer- 
cial form  before  1893,  such  as  the  old  Panama  Company,  as  in  the 
case  of  commercial  associations  or  the  associations  assimilated  to  them, 
created  since  1 893. 

Bankruptcy  law,  to  repeat,  applies  in  any  event  only  to  commercial 
companies  and  individuals;  the  quasi-bankruptcy  proceeding  called 
"judicial  liquidation"  is  equally  inapplicable  to  this  Old  Panama 
Company,  a  noncommercial  company  created  before  1893.  We  have 
simply  a  dissolution  and  settlement  of  a  partnership  by  the  partners, 
if  they  can  agree  unanimously,  and  if  the}7  can  not,  then  under  the 
power  of  the  courts  on  general  principles  of  law,  ex  necessitate. 


PANAMA   CANAL  TITLE. 


17 


But  what  is  left  to  the  courts  is  the  resolution  of  questions  which 
the  laws  do  not  themselves  resolve,  and  the  necessities  of  the  case 
nevertheless  require  to  be  resolved.  This  is  very  little,  and  we  are 
not  to  understand  that  because  the  partners  can  not  agree  and  the 
courts  must  be  resorted  to,  the  rights  of  all  concerned,  even  their 
rights  of  action,  are  ended  or  subject  to  the  mere  caprice  of  the 
judge.  It  is  quite  otherwise.  The  Civil  Code  and  the  statutes  and 
recognized  maxims  govern  as  before,  so  far  as  it  is  possible  to  apply 
them.  Ordinarily  all  that  the  court  does  is  to  appoint  a  liquidator, 
and  authorize  him  generally  to  liquidate  as  he  deems  best. 

The  partnership  is  dissolved,  though  in  a  sense  continuing  to  exist 
(same  authors,  372).  Being  resolved  into  its  units,  equal  and  having 
rights  well  determined  by  the  code,  they  liquidate  themselves  if  they 
can  unanimously  agree,  or  where  their  by-laws  have  provided  for  the 
choice  of  a  liquidator  by  the  general  meeting  (as  the}?-  usually  do),  he 
liquidates.  In  cases  in  which  they  are  not  unanimous  or  have  not  pro- 
vided for  a  liquidator,  necessity  requires  the  court  to  name  one  (same 
authors,  sections  368-369,  where  it  is  remarked  that  foreign  codes 
differ  in  permitting  a  mere  majority  to  decide,  if  a  majority  can  agree 
upon  a  liquidator);  and  he  is  not  an  officer  representing  the  court,  but 
the  judicially  selected  representative  or  agent  of  the  associates  to 
settle  or  wind  up  their  affairs. 

The  associates  could  give  him  all  their  unlimited  powers  of  liqui- 
dating. If  they  do  not  meet  and  agree  unanimously — and  this  is 
obviously  impracticable  among  several  hundred  thousand  scattered 
stockholders — then  the  court  gives  him  general  powers  or  determines, 
from  among  the  powers  of  the  associates  or  partners,  what  ones  are  to 
be  given,  and  these  are  confined  to  the  requirements  of  liquidation  or 
winding  up. 

This  course,  as  I  have  said,  is  regarded  as  necessary  to  reach  a  liqui- 
dation and  the  partition  to  which  the  individual  associates  or  partners 
are  entitled  (the  code  not  having  provided  any  method  of  reaching 
those  ends)  in  the  absence  of  the  concurrent,  unanimous  action  of  the 
associates  or  partners. 

If  the  creditors  are  dissatisfied  they  can  (but  not  in  the  case  of  this 
noncommercial  association,  constituted  before  1893)  apply  for  a  dec- 
laration of  bankruptcy. 

The  authors  already  quoted  say  (sees.  377-379):  m 

Foreign  laws,  which  have  concerned  themselves  with  the  liquidation  of  associa- 
tions, have  determined  the  powers  of  the  liquidators  and  their  obligations;  it  is  not 
so  with  us,  for  the  simple  reason  that  our  Code  of  Commerce  [and  the  same,  as  I  have 
said,  is  true  of  the  Civil  Code]  has  not  treated  of  liquidation.  As  has  been  said  above, 
it  belongs  to  the  associates  or  to  the  tribunal,  in  naming  a  liquidator,  to  determine 
his  obligations  and  his  powers.  But  it  is  important  to  inquire  what  they  are,  in  case 
the  act  of  appointment  is  silent  or  incomplete  on  the  question.    *    *    *   The  liqui- 

8751—02  2  . 


18 


PANAMA   CANAL  TITLE. 


datorisan  agent;  he  is  chosen  by  the  associates,  or  by  the  court,  to  represenl  the 
dissolved  society,  to  the  end  of  terminating  its  operations,  paying  its  creditors,  recov- 
ering the  debts  owing  to  it,  and  thus  getting  at  the  net  assets  which  are  to  he  parti- 
tioned among  the  associates.  *  *  *  It  is  necessary  to  admit,  without  restriction, 
that  it  is  only  the  association  (not  the  creditors)  whom  the  liquidator  represents.  It 
is  not  necessary  to  argue  otherwise  Erom  judgments  which  confer  ponu  rs  the  most  exten- 
sive upon  the  liquidators  for  the  realization  and  partition  of  the  assets.  The  extent 
of  the  powers  of  the  liquidator  can  not  take  from  the  functions  he  performs  their 
essential  character.  As  has  been  justly  remarked,  however  considerable  we  suppose 
the  powers  of  the  liquidator,  they  can  not  exceed  those  which  belong  to  the  asso- 
ciates themselves.  Who,  however,  can  regard  the  associates  as  the  agents  or  repre- 
sentatives of  their  creditors? 

By  a  judgment  of  4th  February,  1889  (Exhibit  11),  a  liquidator  was 
appointed,  in  pursuance  of  article  1871  of  the  Civil  Code  (above  quoted), 
for  the  Old  Panama  Company,  for  the  reason  that  it  was  in  difficulties, 
practically  insolvent,  that  a  vain  attempt  had  been  made  to  obtain  an 
extraordinary  general  meeting,  that  the  by-laws  did  not  intend  to, 
and  could  not,  deprive  a  shareholder  of  the  right  which  article  1871 
gave  him,  etc.;  and  the  liquidator's  appointment  was  "with  powers  the 
most  extensive,  especially  to  cede  or  contribute  to  any  new  association 
the  whole  or  part  of  the  association's  assets,"  etc. 

He  was  not,  however,  authorized  by  the  court  or  by  the  special  act 
of  France  of  1893  to  reorganize  the  old  company,  and  has  never 
undertaken  to  do  so.    That  would  not  be  liquidating. 

It  seems  to  have  been  supposed  that  the  broad  power  given  is  some- 
thing very  extraordinary,  and  of  doubtful  validity.  But  the  doubt,  if 
there  be  one,  is  certainly  not  as  to  the  power  to  get  rid  of  all  the  assets. 
It  is  rather,  it  seems  to  me,  as  to  the  power  to  do  other  than  that, 
viz,  to  contribute  to  another  company,  with  the  result  of  an  indefi- 
nite postponement  of  the  end  of  the  liquidation  or  winding  up;  not 
as  to  the  power  to  turn  over,  or  consent  to  have  turned  over,  to  a 
purchaser  for  cash  the  original  or  exchanged  assets  of  the  company, 
but  rather  as  to  that  of  beginning  and  continuing  the  agreement  of 
contribution  with  the  new  company  looking  to  future  work  on  the 
canal.  Certainly,  to  sell  the  property  and  obtain  cash  with  which  to 
pay  the  creditors  and  satisfy  the  demands  of  the  associates  for  a  par- 
tition of  what  remains,  if  anything,  is  one  of  the  most  ordinary  and 
obvious  methods  of  liquidating  in  all  countries. 

However,  either  course  would  seem  to  be  within  the  limits  of  legiti- 
mate liquidation.  The  one  adopted  appeared  to  promise  more  to  the 
creditors  and  stockholders  than  that  of  selling  offhand  the  remains  of  a 
discredited  enterprise  and  some  machinery  of  little  or  no  value  for  any 
other  uses. 

But  it  seems  to  be  supposed  that,  having  made  a  contribution  which 
transferred  the  ownership  of  the  canal  property  to  a  new  company  for 
the  price  of  60  per  cent  of  the  net  earnings  of  the  completed  canal, 
the  liquidator  can  not,  under  his  original  powers  or  under  any  power 


PANAMA    CANAL  TITLE. 


10 


the  court  can  add  thereto,  sell  or  dispose  of  or  release  for  a  cash  con- 
sideration this  60  per  cent  of  expected  earnings. 

It  is  difficult  to  see  wherein  this  property  or  right  is  more  sacred  or 
inalienable  than  the  canal  itself,  which  was  disposed  of  by  the  Liquida- 
tor in  L894  to  the  new  company. 

If  it  is  a  debt  owing  to  the  old  company,  represented  by  the  liquida- 
tor, it  is  an  asset  of  a  very  ordinary  kind,  such  as  a  Liquidator  collects, 
compromises,  exchanges,  or  otherwise  disposes  of  as  seems  best  for 
his  principals.  That  is  what  it  amounts  to,  so  far  as  all  but  the  rail- 
road property  is  concerned,  for  the  agreement  of  contribution,  as 
embodied  in  the  by -laws  of  the  new  company,  expressly  provided  that — 

The  present  corporation  shall  become  owner  of  the  property  and  rights  hereby  ceded 
and  contributed  on  and  from  the  day  when  it  shall  have  been  finally  constituted, 
except,  however,  what  is  to  be  stated  hereinafter  in  regard  to  the  Panama  Railroad. 

Neither  is  it  apparent  why,  if  the  tribunal  could  have  originally 
authorized  a  sale  of  all  the  property  or  assets  of  whatever  kind,  it  has 
any  less  power  to  do  so  now. 

If  the  title  to  the  railroad  stock  is  in  any  sense  still  in  the  old  com- 
pany, all  the  more  clearly  it  can  be  sold  by  the  liquidator  as  an  ordinary 
unexchanged  asset,  or  quitclaimed  by  him  to  a  purchaser  from  the 
new  company. 

But  it  has  been  suggested  that  the  proposed  action  of  the  liquidator 
is  a  bad  bargain  for  the  associates  and  with  regard  to  the  creditors  of 
the  old  company;  that  he  would  be  wiser  to  take  his  chances  on  the 
60  per  cent  profits  of  the  Panama  Canal  to  be  (possibly)  constructed 
by  the  French  company,  than  accept  the  certainty  of  a  cash  payment 
equal  to  the  present  value  of  the  canal,  the  concession  and  the  other 
property. 

Can  the  validity  of  the  sale  or  disposal  of  eveiw  piece  of  property 
embraced  in  the  assets  of  a  fading  partnership  depend  upon  the  wis- 
dom of  it,  or  the  validity  of  the  court's  authorization  of  such  sale 
depend  upon  that  ?  Who,  moreover,  is  to  judge  of  the  wisdom  of  this 
act? 

The  liquidator  has  decided,  the  court  has  approved  his  decision  and 
published  its  approval,  as  the  special  act  of  July,  1893,  required,  and 
but  one  among  the  stockholders  and  creditors  attempted  to  make  use 
of  the  right  to  attack  the  judgment  of  approval,  and  that  one,  a  bond- 
holder, was  told  that  his  legal  representative  had  appeared  in  court 
and  expressly  approved  the  act  and  in  so  doing  represented  his  inter- 
ests as  one  of  the  bondholders,  in  pursuance  of  the  special  law  of 
France.  Not  one  of  the  general  creditors  (if  there  are  any  such) 
objected,  and  the  mandataire  or  representative  of  the  bondholders  has 
repeatedly  and  formally  approved. 

Under  these  circumstances,  it  is  to  be  presumed  in  fact  that  the 
course  is  a  wise,  or,  at  least,  reasonable  one,  from  the  standpoint  of 


20 


PANAMA  CANAL  TITLE. 


those  who  are  selling,  even  if  it  can  be  imagined  that  its  wisdom  or 
unwisdom  has  any  bearing  upon  the  validity  of  the  sale. 

The  bondholder,  Donnadieu,  who  attacked  the  judgment  of  March 
19,  1902  (Exhibit  1).  approving  the  liquidator's  consent  to  the  sale, 
was  decided  against  on  July  3  last  (Exhibit  5),  and  the  court  of  appeals 
of  Paris  reheard  the  case  and.  adopting  the  reasons  of  the  lower  court, 
repeated  the  decision  against  him  on  August  5  (Exhibit  6). 

The  judgment  of  approval  of  the  consent  of  the  liquidator  to  the 
sale  was  rendered  on  March  19,  1902  (Exhibit  4).  in  pursuance  of 
articles  10  and  11  of  the  special  law  of  July  1,  1893,  which  arc  as 
follows: 

Art.  10.  All  acts  tending  to  alienate  any  assets  of  the  company,  all  contracts  entailing 
a  transfer  or  contribution  of  the  whole  or  of  a  part  of  the  assets  of  the  concern,  ema- 
nating from  the  liquidator  of  the  Universal  Company  of  the  Interoceanic  Canal  of 
Panama,  shall  be  subject  to  the  approval  of  the  civil  tribunal  of  the  Seine,  which  shall, 
on  the  report  of  one  of  the  justices,  pass  upon  the  question  in  open  court. 

Art.  11.  All  decrees  of  approval  or  ratification  rendered  in  accordance  with  the  pre- 
ceding article  shall  be  published,  within  a  term  of  ten  days,  in  the  "Journal  OfficieV 
and  in  the  11  Journal  Ofiicicl"  (Commune  edition). 

This  decree  may  be  attacked  by  the  shareholders,  by  the  mandataire  of  the  bond- 
holders, and  by  other  creditors  of  the  company,  within  a  delay  of  not  exceeding  one 
month  from  the  date  of  the  publication  aforesaid.  The  civil  tribunal  shall  adjudicate 
the  question  within  the  space  of  one  month,  as  in  the  case  of  matters  demanding  an 
immediate  and  summary  adjudication.  The  appeal  from  such  decision  must  be 
entered  within  ten  days  from  the  time  of  notification  of  said  judgment  to  the  party  in 
person  or  at  his  domicile. 

This  did  not  confer  power  upon  the  Liquidator.  It  restrained  the 
practically  unlimited  power  he  already  had  by  subjecting  some  of 
his  specific  acts  to  the  judicial  approval. 

The  words  briefly  translated  into  the  word  "attacked"  in  articie  11 
are  "frappecL  tierce-opposition"  Donnadieu,  the  bondholder  of  the 
old  company,  has  made  this  attack  upon  the  judgment  of  approval,  or 
attempted  to  do  so. 

This  proceeding  called  **  ti>  rc<  -opposition  "  is  one  by  means  of  which 
a  person  who  is  not  party  to  the  suit,  but  believes  his  rights  violated 
or  injured  by  the  judgment,  can  have  it  set  aside.  It  can  not, 
under  the  general  law,  be  made  use  of  by  one  who.  though  not 
actually  a  party,  has  been  represented  by  one  of  the  parties.  The 
special  law  concerning  the  Liquidation  of  the  Old  Panama  Company, 
however,  seems  to  have  extended  it  to  the  stockholders  of  the  old  com- 
pany, although  represented  by  the  liquidator,  and  to  have  extended  it 
to  any  possible  general  creditors  (not  bondholders),  although  appar- 
ently represented  by  the  niandataire  of  the  bondholders,  as  may  be 
inferred  from  the  second  paragraph  of  article  1.  taking  away,  or 
rather  suspending,  their  rights  of  action  and  permitting  them  to  sue 
only  in  case  the  tnmidatairt  neglects  or  refuses  to  do  so.  But  whether 
general  creditors  are  represented  is  obscure  .and  not  important  in 


PANAMA  CANAL  TITLE. 


21 


regard  to  the  present  inquiry,  since  the  general  creditors  were  per- 
mitted to  oppose  the  judgment  of  approval  and  did  not  resort  in  any 
single  instance  to  the  ki  tierce-opposition" 

The  special  law,  so  far  as  the  judgment  of  approval  is  concerned,  is 
in  some  respects  narrower  than  t ho  general  law.  because,  according  to 
that  law,  there  is  no  limit  of  time  for  the  proceeding  of  "tierce-oppo- 
sition" by  an  outsider,  and  the  time  for  appeals  which,  under  the  gen- 
eral law.  is  two  months,  is  cut  down  to  ten  days.  In  Beauchet's 
Treatise  on  Procedure  in  Civil  and  Commercial  Matters  (third  edition, 
1891)  we  read: 

1045.  This  extraordinary  proceeding  ["tierce  opposition"]  can  be  employed  against 
any  judgment,  whatever  may  be  its  nature  and  the  jurisdiction  of  the  court  pro- 
nouncing it.  All  the  decisions  in  first  instance,  or  final,  of  justices  of  the  peace, 
"prud  'homines,"  tribunals  of  commerce,  civil  tribunals  and  courts  [that  is,  courts 
of  appeal]  are  subjected  to  it.  The  decrees  of  the  court  of  cassation  only  are  free 
from  it,  according  to  the  decisions  of  that  court.  As  a  decree  of  the  supreme  court 
does  not  affect  the  basis  or  foundation  [fond]  of  the  litigation,  it  can  not  occasion 
any  serious  and  real  harm. 

1046.  The  law  has  not  fixed  any  limit  of  time  within  which  the  tierce  opposition 
must  be  instituted.  It  has  left  this  point  to  the  control  of  the  ordinary  rules  of  pre- 
scription. The  tierce  opposition  can  be  employed  as  long  as  the  right  upon  which 
the  third  party  bases  it  has  not  been  taken  away  by  the  effect  of  any  prescription 
acquired  against  him,  conformably  to  the  ordinary  law. 

The  ordinary  methods  of  attacking  a  judgment,  according  to  Beau- 
chet's Treatise  on  Procedure  (sees.  945,  946)  are  by  appeal  and  opposition. 
Opposition  is  a  request  to  the  court  entering  a  judgment  on  default  to 
set  it  aside.    There  is  no  such  judgment  in  the  Donnadieu  case. 

The  extraordinary  methods  are,  according  to  the  same  authority, 
the  "tierce  opposition,"  the  "  requete  civil,"  and  the  "pourvoi  en 
cassation." 

The  **requete  civil"  is  an  attack  upon  a  judgment  of  a  court  of 
appeals  only,  based  upon  fraud  or  improper  conduct  in  connection 
with  the  judgment.  Nothing  of  the  kind  has  been  suggested,  and  this 
may  be  dismissed  from  consideration. 

An  appeal  has  been  taken  and  decided  against  Donnadieu.  (Exhibits 
5  and  6.) 

Tierce  opposition  has  been  explained — an  application  to  have  a  judg- 
ment set  aside  by  one  not  a  party  to  its  rendition,  because  it  violates 
some  legal  right  of  his.  Any  judgment  of  amT  court  can  so  be  attacked, 
provided  a  right  of  the  applicant  has  been  violated,  except  judgments 
of  the  court  of  cassation.  No  one  can,  however,  pretend  that  the 
appellate  judgment  against  Donnadieu  violates  any  right  of  his,  because 
that  affirmance  can  hardly  affect  any  one  but  Donnadieu.  Espe- 
cially can  not  other  bondholders  or  creditors  of  the  old  company  escape 
the  statutory  obligation  to  tile  their  own  tierce  oppositions  within 
the  month  allowed  by  the  special  act.  by  attacking  the  affirming  judg- 
ment against  Donnadieu. 


22 


PANAMA  CANAL  TITLE. 


This  leaves  nothing  to  be  considered  but  Donnadieu's  proceeding  in 
cassation,  if  he  should  institute  one. 

The  proceeding  in  cassation  is  not  a  general  appeal,  or  even  a  writ 
of  error  as  we  know  the  latter.  The  court  of  cassation  annuls  judg- 
ments and  remands  cases,  where  the  judgments  violate  the  law,  almost 
wholly  statutory. 

His  case  has  two  parts — one  between  him  and  the  new  company,  the 
other  between  him  and  the  liquidator. 

He  alleged  that  his  rights  would  be  violated  by  the  new  company's 
selling  the  property,  and  brought  suit  to  restrain  it. 

He  alleged  that  the  judgment  approving  the  liquidator's  consent 
violated  his  rights,  and  asked  to  have  the  judgment  set  aside. 

Both  parts  were  decided  upon  exceptions,  instead  of  upon  the  two 
questions  he  thus  sought  to  raise. 

It  was  held  that  he  was  not  allowed  by  the  special  law  to  tile  tierce 
opposition  to  the  judgment  of  approval,  because  he  was  a  bondholder 
and,  as  such,  represented  by  the  mandataire  of  the  bondholders,  and 
because  the  special  law  allows  tierce  opposition  only  to  the  stockhold- 
ers of  the  old  company,  the  bondholders'* mandataire,  and  the  other 
creditors. 

This  is  the  plain  reading  of  that  law. 

He  does  not  deny  that  bondholders  are  unable  to  have  the  tierce 
opposition  individually,  but  asserts  that  he  is  not  a  bondholder,  but 
ceased  to  be  one  by  getting  judgment  for  the  amount  of  his  bonds, 
and  so  became  one  of  the  44  other  creditors/' 

Certainly  an  American  court,  without  regard  to  the  question  of  an 
alteration  of  his  technical  rights  by  getting  a  judgment  of  recovery  on 
his  bonds,  would  say  that,  within  the  meaning  of  the  special  law,  he 
is  a  bondholder  and  that  he  is  not  what  is  meant  by  that  law  as  an 
44 other  creditor."  The  meaning  or  ' 4 spirit"  of  the  law  is  as  impor- 
tant to  French  courts  as  to  ours. 

The  French  courts  denied  that  there  had  been  any  alteration  of  his 
rights,  and  held  that  a  man  does  not  cease  to  be  a  bondholder  because 
he  gets  a  judgment  that  his  bonds  shall  be  paid. 

I  see  no  reason  to  doubt  that  that  sensible  view  is  correct. 

Donnadieu  will  fail  to  reverse  the  court  of  appeals  on  the  branch  of 
the  case  concerning  the  liquidator's  consent,  unless  the  court  of  cas- 
sation believes  that  the  liquidator  has  not  the  power  to  dispose  of  the 
assets  in  question,  with  the  approval  of  the  lower  courts,  and  concur- 
rence of  the  mandataire  of  the  bondholders,  and  further  that  his  doing 
so  violates  some  law  on  the  subject  of  liquidation  or  some  law  giving 
rights  to  Donnadieu. 

And  even  if  it  should  so  believe,  if  it  also  believes  that  Donnadieu's 
individual  tierce  opposition  was  inadmissible  under  the  law — the 
only  question  decided  by  the  judgment  below — it  would  probably  fail 


PANAMA  CANAL  TITLE. 


23 


to  annul  the  judgment  refusing  to  admit  him  as  being  a  judgment  vio- 
lating a  law. 

With  the  manner  of  exercising  the  liquidator's  power  of  sale  (if  it 
exists)  the  lower  courts  have,  but  the  court  of  cassation  has  not,  any- 
thing to  do. 

That  the  liquidator  has  that  power  I  have  attempted  to  show,  and 
shall  merely  add  here  that  the  special  act  of  the  French  Parliament 
expressly  recognizes  and  sanctions  both  the  power  of  the  liquidator  to 
alienate  the  assets — a  power  which  liquidators  the  world  over  possess — 
and  the  authority  of  the  lower  courts  to  approve  or  disapprove  a 
particular  use  thereof. 

As  for  the  branch  of  the  case  alleging  that  the  sale  by  the  new  com- 
pany was  beyond  the  powers  of  that  company,  the  decision  was  that 
Donnadieu,  being  merely  a  bondholder  or  creditor  of  the  old  company, 
had  no  such  legal  relations  with  the  new  company  as  to  be  able  to  ques- 
tion the  power  of  that  company  as  to  the  disposition  of  its  property. 

A  similar  judgment  (on  default)  has  recently  been  rendered  in  the 
case  of  one  Sautereau,  an  engineer,  who  claimed  that  certain  plans  of 
his  had  been  furnished  to  the  liquidator  and  would  be  included  in  the 
sale,  and  that  the  liquidator  had  not  paid  him  for  them.    (Exhibit  7.) 

It  is  needless  to  dwell  upon  this  branch  of  the  Donnadieu  case, 
because,  even  if  he  had  no  such  relations  with  the  new  company  as  to 
be  able  to  raise  such  a  question,  there  are  others  who  can  at  least 
raise  it — namely,  the  stockholders  and  creditors  of  the  new  company 
itself. 

I  have  already  indicated  my  opinion  that  they  would  raise  in  vain 
the  general  question  of  the  power  of  the  company,  with  the  consent  of 
the  liquidator  and  mandataire  of  the  bondholders  of  the  old  company, 
to  sell  the  canal  property.  It  is  only  necessary-  to  add  that  a  creditor 
of  the  new  company,  a  solvent  concern  able  and  willing  to  pay  any 
debts  it  may  owe  out  of  its  funds  or  out  of  the  purchase  price,  can 
not  prevent  a  sale  of  the  company's  property  under  any  principle  of 
law  or  reason  that  has  occurred  to  me,  any  more  than  an  individ- 
ual's debtor,  if  he  is  solvent,  can  prevent  him  from  selling  a  horse  or 
a  house. 

As  for  the  stockholders  of  the  new  company,  they,  being  the  com- 
pany itself,  and  bound  by  the  acts  of  their  own  duly  authorized  general 
meetings  and  officers,  could  question  nothing  but  the  fact  that  their 
by-laws  did  empower  the  general  meeting  to  make  such  a  sale.  I  have 
already  shown  that,  in  my  judgment,  they  clearLy  do. 

III.  But  it  is  said  that — 

3.  The  French  courts  have  not  power  to  authorize  the  liquidator 
and  the  new  company,  or  either  of  them,  to  enter  into  this  sale. 

It  has  been  shown  that  they  have  undertaken  to  do  so  as  to  the  liqui- 
dator, but  the  French  special  law  of  July,  1893,  is  itself  questioned 


24 


PANAMA  CANAL  TITLE. 


as  to  its  validity,  and  the  French  judgments  as  perhaps  violations  of 
fundamental  rights  which  are  assumed  to  exist  and  assumed  to  be  pro- 
tected and  guaranteed  by  French  institutions. 

The  courts  do  not  undertake  to  authorize  the  new  company.  That 
company  needed  no  judicial  authorization. 

It  is  not  perceived  that  the  vested  right  alleged  to  exist  in  the  CO  per 
cent  net  earnings  in  favor  of  the  stockholders  but,  in  reality,  bene- 
ficial to  the  bondholders  and  creditors  of  the  old  company,  is  any  more 
of  a  vested  right  than  the  right  to  the  machinery  formerly  owned  b\T 
the  old  company,  but  transferred  to  the  new.  Of  course,  it  is  a  vested 
and  a  valuable  right.  But  the  liquidation  is  still  going  on,  and  it  is 
proposed  to  realize  on  that  asset,  to  dispose  of  it  for  cash  to  be  paid  to 
the  creditors  and,  after  that,  if  sufficient  (which  it  is  not),  to  the  stock- 
holders. The  stockholders  are  the  debtors  of  the  bondholders  and 
other  creditors  of  the  old  company,  and  they  will,  after  the  receipt  of 
the  price  it  is  proposed  to  pay.  be  unable  to  pay  their  debts.  They 
are  so  now:  that  is  the  principal  reason  for  the  liquidation  of  their 
concern. 

But  the  act  of  July,  1S93,  does,  so  the  French  courts  hold,  exclude 
the  bondholders  from  individually  objecting  to  the  sale — at  least  by 
formal  proceedings  in  court.  It  has  caused  a  single  agent  to  be 
appointed  for  them,  however,  and  if  there  were  any  general  objection 
on  their  part,  there  is  no  reason  to  suppose  that  he  would  not  act 
accordingly  and  voice  their  sentiments.  This  would  not  lead,  neces- 
sarily, to  a  different  result.  The  sale  might  well  be  approved,  because 
their  reasons  were  unsatisfactory  to  the  court. 

It  may  seem  strange  that  the  French  special  law  of  1893,  by  some 
oversight,  perhaps,  permitted  all  the  individual  creditors,  though 
possibly  represented  by  the  mandutoire*  and  the  individual  stock- 
holders, though  certainly  represented  by  the  liquidator,  to  have  a 
hearing  in  court,  and  yet  omitted  to  give  one  to  the  bondholders 
individually. 

But  in  view  of  the  universal  acquiescence  of  those  general  creditors 
(if  any  exist),  having  identical  interests  with  the  bondholders,  and  of 
all  others  concerned,  including  the  legal  representative  of  the  bond- 
holders, the  probability  is  that  the  same  end  would  have  been  reached 
by  the  court. 

However,  such  is  the  law  passed  by  the  Parliament  of  France,  and 
it  remains  to  inquire  whether  it  is  invalid. 

Nothing  is  more  familiar  to  us  than  an  adjudication  by  one  of  the 
courts  that  a  law  regularly  passed  is  invalid,  null  and  void.  But 
when  this  first  happened  in  our  country  it  was  regarded  as  a  very 
e  x t  raordi  nary  thing. 

In  France,  as  in  England,  certain  maxims  have  come  to  be  regarded 
as  extremely  sacred,  and  England  is  said  to  have  an  unwritten  consti- 


PANAMA  CANAL  TITLE. 


25 


tution.  To  some  extent  the  same  may  be  said  of  France.  Bui  it  is 
not  regarded  as  a  necessary  consequence  that  the  power  of  the  courts 
is  sufficient  to  set  aside  a  law  which  they  regard  as  violating  those 
maxims. 

Beauchet,  under  the  heading"  of  "General  notions, "  says: 

With  Montesquieu,  writers,  jurisconsults,  philosophers,  statesmen,  political  assem- 
blies, have  discussed  the  thesis  of  the  coexistence  and  distinction  of  three  powers  in 
the  State — legislative  power,  executive  power,  judicial  power.  The  number  of  writ- 
ings to  which  this  has  given  rise  is  considerable.  *  *  *  Thus  the  principle  of 
the  separation  of  powers  which,  since  the  declaration  of  the  rights  of  man,  is  con- 
sidered as  essential  to  every  constitution,  is  applied  not  only  to  the  relations  of  the 
legislative  power  with  the  executive  power,  but  also  to  those  of  the  judicial  authority 
with  the  administrative,  which  is  confounded,  but  improperly,  with  the  executive 
power.  Supposing,  then,  that  there  exist  three  distinct  powers  in  the  State,  let  us 
see  rapidly  how  that  separation  has  been  established  and  what  are  the  most  impor- 
tant consequences  which  follow  from  it.  The  judicial  power  has  been  distinct  from 
the  legislative  power  since  the  decree  of  16-24  April  [August?],  1790,  title  2,  article 
10.  The  subsequent  constitutions  of  the  3d  September,  1791,  and  5th  Fructidor, 
year  3,  renewed  that  distinction,  and  article  127  of  the  present  penal  code  has  sanc- 
tioned it.  From  the  principle  established  by  the  law  of  1790  flow  the  following 
consequences: 

1.  The  tribunals  can  not  oppose  the  execution  of  the  laws;  they  can  not,  as  formerly 
could  the  parliaments,  remonstrate. 

2.  It  is  forbidden  to  the  tribunal  to  imitate  the  ancient  parliaments  by  declaring 
in  advance  and  in  a  general  manner  in  their  decrees  how  they  will  decide  in  the 
future  such  or  such  a  question  of  law  and  thus  create  a  special  law  for  their  own  juris- 
diction. If  attempts  of  that  kind  have  sometimes  been  made,  the  supreme  court  has 
always  suppressed  them.    (Code  Civil,  art.  5;  Code  Penal,  art.  127.) 

3.  All  political  deliberations  are  forbidden  to  the  judicial  bodies  (law  30  August, 
1883,  art.  14,  sec.  2).  Reciprocally,  all  mixing  in  the  administration  of  justice  is  for- 
bidden to  the  legislative  power.  This  rule  leads  to  several  consequences  which  it  is 
sufficient  to  state: 

(1)  The  legislative  chambers  can  not  render  any  judgment  except  the  Senate  in  a 
case  provided  for  by  article  12  of  the  law  of  July  16,  1875  (trying  the  President  of 
the  Republic). 

(2)  The  legislature  can  neither  reform  nor  nullify  a  judgment,  even  one  irregularly 
rendered.  This  right  belongs  only  to  the  judicial  authority  obtaining  jurisdiction 
by  legal  methods  of  proceeding. 

(3)  A  new  law  can  not  disturb  a  matter  irrevocably  adjudicated  according  to  the 
preexisting  law;  the  resulting  situation  constitutes  an  acquired  right, 

(4)  A  new  law  can  not  deprive  the  tribunal  of  a  proceeding  instituted  before  it 
and  of  which  it  has  jurisdiction,  except  in  the  case  where  the  law  announces  the  sup- 
pression of  the  tribunal  itself. 

The  judicial  power  is,  in  the  second  place,  distinct  from  the  administrative  power, 
and  every  invasion  of  the  domain  of  the  administration  is  severely  prohibited.  Arti- 
cle 13  of  title  2  of  the  decree  of  16-24  August,  1790,  the  constitutions  of  3d  September 
and  5th  Fructidor,  year  3,  are  clear  on  that  point.  This  prohibition  is  in  our  day 
sanctioned  by  the  second  section  of  article  127  of  the  Penal  Code. 

From  these  "  general  notions,"  as  the  author  calls  them,  it  is  evi- 
dent that  even  the  distinction  between  the  three  powers  of  govern- 
ment is  a  thing  to  be  evolved  largely  from  codes  and  statutes  which 


26 


PANAMA   CANAL  TITLE. 


the  legislative  power  makes  and  alters  as  it  thinks  best.  Nothing  is 
more  common  than  a  law  amending  one  of  the  codes. 

In  Riviere's  French  Codes,  Ordinary  Laws.  Decree-.  Ordinances 
and  Opinions  of  the  Council  of  State  (thirtieth  edition,  1902),  a  work 
w  hich  seems  to  be  very  complete,  there  is  no  regular  constitution  of 
France,  as  we  understand  the  name:  but  in  its  place  we  find  "laws 
constitutional  and  organic." 

These  were  adopted  in  L875,  etc.,  after  the  establishment  of  the 
present  Republic,  and  can  be  amended  only  by  the  General  Assembly, 
as  they  themselves  provide.  This  General  Assembly  is  composed  of 
the  two  Chambers  of  Parliament  sitting  as  one. 

These  constitutional  acts  are  confined  to  the  organization  of  the 
Government,  and  contain  no  provisions  for  the  protection  of  private 
rights. 

No  older  constitution  is  printed  in  the  work,  although  here  and  there 
among  the  ''ordinary  laws'"  is  an  extract  from  some  ancient  constitu- 
tion; among  others,  one  concerning  personal  liberty  and  orotection 
from  arbitrary  arrest. 

It  may  be  added,  also,  that  the  decisions  of  the  French  courts,  as 
those  of  the  English  courts,  refer  to  numerous  maxims  of  fundamental 
justice  or  of  settled  practice  in  France,  although  it  is  practically  true 
that  French  judicial  decisions  on  points  of  law  are  mere  interpretations 
and  applications  of  statutory  or  written  law. 

Among  the  French  maxims  referred  to  is  the  one  that  no  person  can, 
in  France,  sue  by  an  authorized  agent,  i.  e.,  otherwise  than  in  person. 

But  it  is  difficult  to  establish  a  negative,  and  it  must  suffice  to  say 
that  authority  to  delare  a  law.  regularly  passed  and  proclaimed,  inef- 
fective has  not  been  found  to  exist  in  the  French  courts.  It  may  be 
added  that  Donnadieu  might  very  well  have  resorted  to  an  attack  upon 
the  validity  of  the  special  law  of  1893,  if  such  a  power  in  the  courts 
had  existed;  but  he  has  made  no  suggestion  of  that  kind. 

It  is  not  intended  by  this  discussion  to  intimate  that  the  special  law  of 
1893  does  violate  any  fundamental  rights  such  as  are  looked  upon  either 
in  France  or  the  United  States  as  sacred.  On  the  contrary,  it  seems 
to  be  defective  in  regarding  too  much  the  rights  of  individuals  and  in 
leaving  to  the  admirable  rules  of  the  Code  Napoleon  questions  which 
might,  to  the  advantage  of  all  concerned,  have  been  submitted  to  the 
discretion  of  the  civil  tribunal  of  the  Seine,  to  the  ultimate,  instead  of 
the  merely  conditional  or  provisional,  determination  of  the  mandatairi 
of  the  bondholders,  and  to  the  decision  of  the  liquidator.  The  winding 
up  of  the  old  company  might  well  have  been  made  more  summary  and 
more  like  a  bankruptcy  proceeding. 

As  it  is,  under  that  statute  the  original  indebtedness  of  the  old  com- 
pany remains,  and  will  remain,  entire  as  against  it  and  its  liquidator 
until  the  last  franc  is  paid;  the  creditors  are  not  all  or  finally  constituted 


PANAMA  CANAL  TITLE. 


27 


as  a  body  or  mass,  as  they  are  in  case  of  bankruptcy  in  France;  indi- 
vidual rights  of  action  of  all  kinds  were  merely  suspended  and  not 
merged  or  ended,  and  a  host  of  difficulties,  which  one  of  our  Legisla- 
tures would  probably  have  terminated  without  shocking  the  sense  of 
propriety  of  American  lawyers,  were  left  to  plague  the  tribunals. 
As  an  illustration,  we  see  Donnadieu  as  late  as  1898  undertaking  to 
sue  the  individual  stockholders  of  the  old  association  for  the  amountof 
his  bonds,  and  it  is  not  at  all  certain  that  the  attempt  was  unreasonable. 

IV.  But.  supposing  it  proven  or  admitted  that  the  title  of  the  United 
States  would  be  valid  or  legally  good  in  itself,  it  is  said — 

I.  That,  at  all  events,  the  United  States  would  take  the  property  as 
a  trust  fund,  subject  to  the  total  obligations  to  the  stockholders  bond- 
holders, and  the  other  creditors  of  both  companies. 

So  far  as  the  stockholders,  the  bondholders,  and  the  other  creditors  of 
tin1  new  company  are  concerned,  the  stockholders,  as  we  have  seen, 
would  be  bound  by  the  action  of  their  own  proper  representative,  the 
general  meeting;  as  for  the  bondholders  (leaving  out  of  consideration 
the  bondholders  of  the  Panama  Railroad  Company,  who  will  doubtless 
have  to  be  considered  and  perhaps  paid  from  the  railroad  earnings,  or 
otherwise,  and  the  amount  of  whose  bonds  is  given  in  the  last  report 
of  the  Panama  Railroad  Company,  hereto  annexed)  (Exhibit  S),  there 
are  no  bondholders  of  the  new  company;  and,  as  for  its  general  creditors, 
the  company  being  a  solvent  and  more  or  less  nourishing  concern,  in 
view  of  the  value  of  the  railroad  propert}T,  the  indebtedness  to  them 
is  said  to  be  and  must  be  small.  It  can  be  ascertained  and  paid  by  the 
company  before  the  sale  is  consummated,  or  })y  an  arrangement  to 
apply  to  it  a  part  of  the  purchase  money. 

As  a  general  proposition  it  is  not  perceived  how  there  could  be  any 
law  or  equity  for  subjecting  a  purchaser  of  an  article  sold  as  assets  of 
a  failing  partnership  (such  as  the  old  company)  to  the  debts  of  the  part- 
nership. If  that  were  the  law,  there  would  be  no  purchasers  of  such 
assets,  the  creditors  would  receive  no  payment  of  their  debts  out  of 
the  proceeds  nor  stockholders  any  dividend  of  a  residue. 

But  it  does  not  follow  that  the  property  has  not  become  affected  by 
dehnite  liens  diminishing  its  value  to  the  extent  of  the  liens — in  other 
words,  that  the  property  itself,  and  no  longer  merely  the  new  com- 
pany or  its  vendee,  has  or  will  not  become  subjected  to  the  equivalent 
of  mortgages  in  favor  of  bondholders  and  creditors  of  the  old  company. 

It  was  accordingly  deemed  wise  to  make  a  careful  scrutiny  into  all 
possible  defects  of  that  kind,  especially  in  view  of  the  vast  amount  of 
the  old  indebtedness. 

These  liens  might  be  of  three  or  more  kinds — voluntary  or  contrac- 
tual hypothecations  or  mortgages  of  real  property;  judicial  hypoth- 
ecations as  the  result  of  judgments  inscribed  in  the  office  of  the  Keeper 
of  Hypothecations;  and  what  may  be  called  attachments  or  seizures 


28 


PANAMA   CANAL  TITLE. 


by  wa}T  of  execution  of  personal  property,  and  seizures  of  really  for 
debt. 

The  fact  that  the  property,  so  far  as  it  is  important,  is  in  Colombia 
and  not  in  France,  would  not  prevent  the  existence  of  such  liens,  even 
the  judicial  hypothecation,  because  it  is  doubtless  true  in  Colombia,  a 
Latin  country,  as  it  is  in  France,  that  foreign  judgments,  after  receiv- 
ing the  sanction  of  the  domestic  courts,  lead  to  the  judicial  hypothe- 
cation of  real  property. 

It  is  here  again  that  the  special  act  of  1893  has  been,  perhaps,  over- 
careful  of  private  rights  or,  at  least,  of  private  remedies.  The  Civil 
Code  (sees.  2114,  et  seq.)  provides  as  follows: 

2114.  Hypothecation  is  a  real  right  attaching  to  immovable  property  bound  for  the 
discharge  of  an  obligation;  it  is,  in  its  nature,  indivisible  and  subsists  in  entirety  as 
to  all  the  immovables  bound,  as  to  each  one,  and  as  to  every  portion  of  those  immov- 
ables. It  follows  them  into  whose  hands  soever  they  may  pass.  (Code  Civil,  1149, 
1188,  1244,  1912,  2119,  2122,  2161,  2166,  2180,  2903,  2904.)* 

2116.  It  is  either  legal,  judicial,  or  by  agreement. 

2117.  The  hypothecation  called  legal  is  that  which  results  from  the  law.  The 
judicial  hypothecation  is  that  which  results  from  judgments  or  other  judicial  acts. 
Conventional  hypothecation  is  that  which  results  from  conventions,  from  the  forms 
of  documents  and  from  contracts.    (Code  Civil,  2121,  2123,  2124. ) 

2118.  The  following  only  are  susceptible  of  hypothecation:  (1)  Immovable  prop- 
erty used  in  business  (les  biens  immobiliers  qui  sont  dans  Je  commerce)  and  their  accesso- 
ries, regarded  as  immovable;  (2)  the  usufruct  of  the  same  property  during  the  time 
it  continues.    (Code  Civil,  525  et  seq.,  578,  2125.) 

2111).  Movables,  consequently,  can  not  be  hypothecated. 

2123.  The  judicial  hypothecation  results  from  judgments,  whether  in  contested 
cases  or  by  default,  definitive  or  interlocutory,  in  favor  of  him  who  has  obtained 
them.  It  results  also  from  recognitions  or  verifications,  made  by  judgments,  of  sig- 
natures placed  to  an  obligatory  undertaking  unauthenticated  (sons  wing  prhr).  It 
can  be  made  use  of  as  to  the  present  immovable  property  of  the  debtor  and  as  to 
that  which  he  may  acquire,  except  with  the  qualifications  hereinafter  expressed. 
The  decisions  of  arbitrators  do  not  carry  with  them  hypothecations,  except  as  they 
may  be  supplemented  by  a  judicial  order  of  execution.  The  hypothecation  likewise 
does  not  result  from  judgments  rendered  in  foreign  countries,  except  as  these  may  have 
been  declared  executory  by  a  French  tribunal;  without  prejudice  to  any  contrary  dispo- 
sitions which  may  exist  in  political  laws  or  in  treaties.  (Code  Civil,  307,  1350,  1351, 
2114,  2124,  2148,  2160,  2168,  2428;  Code  Procedure,  147,  155,  193,  546.) 

2133.  The  hypothecation  acquired  extends  to  all  the  improvements  made  in  the 
immovable  property  hypothecated. 

Bressolles,  in  a  commentary  on  the  special  law  of  1893,  published  in 
1894,  under  the  title  Liquidation  of  the  Panama  Company,  referring 
to  the  judgment  appointing  the  liquidator  and  declaring'  the  association 
to  be  noncommercial  (it  seems  the  tribunal  of  commerce  about  the 
same  time,  a  few  days  after  that  decision,*  in  fact,  decided  otherwise, 
but  the  court  of  appeals  reversed  this;  Exhibit  8),  sa}Ts,  page  24: 

To  hold  the  Panama  Company  a  civil  company  was  to  declare  it  incapable  of  being 
declared  bankrupt  [en  faillite].    Its  insolvency  and  the  suspension  of  payment  which 


PANAMA  CANAL  TITLE. 


29 


had  followed  put  it  simply  in  the  condition  of  "  dr  confiture, 11  but  in  1889  the  d&canfitwre 
of  civil  associations*  no  more  than  that  of  individuals,  had  in  our  legal  system  any 
regulation  by  law.  Each  of  the  creditors  preserved  in  regard  to  the  association  the 
plenitude  of  his  rights;  he  had  the  right  of  individual  action,  not  only  to  obtain  a 
condemnation  against  it,  but  to  have  himself  paid  in  full  the  amount  of  his  debt  out 
of  the  company's  assets,  to  the  detriment  of  other  ereditors  less  active  or  less  disposed 
to  go  to  the  expense  of  suing. 

It  is  in  consequence  of  these  principles  that  several  bondholders  of  the  Panama 
Company  instituted  proceedings  immediately  after  the  dissolution  against  the  liqui- 
dator, to  obtain  payment  of  the  coupons  overdue  and  reimbursements  of  the  principal 
of  their  bonds,  relying  for  this  latter  purpose  upon  articles  1184  and  1188  of  the  Civil 
Code.  To  these  pleadings  the  liquidator  confined  himself  to  asking  a  postponement 
in  the  discretion  of  the  court,  which  was  given  him,  but  the  plaintiffs  gained  their 
cases,  and  notably  a  condemnation  of  the  company  to  a  total  reimbursement  of  the 
capital  subscribed  by  them.  (See  especially  judgment  of  the  tribunal  of  the  Seine, 
25  June,  1890,  Droit  of  July  4;  judgment  of  26  January,  1893,  Droit  of  29  January, 
confirmed  by  decree  of  29  June,  1893,  Droit  of  1  July. )    (See  Exhibit  10.) 

The  beneficiaries  of  these  decisions  promptly  inscribed  their  judicial  hypotheca- 
tions [upon  a  building  in  Paris].  Certain  of  them  even  proceeded  to  execution.  It 
is  thus  that  Messrs.  Laurillard  &  Fleury,  who  obtained  the  judgment  of  25th  June, 
1890,  seized,  after  the  expiration  of  the  postponement  in  the  discretion  of  the  court 
[delai  de  gr&ce],  a  sum  of  15,081  francs  50  centimes  in  the  safe  of  the  company.  After 
fruitless  resistance  by  way  of  a  reference,  the  liquidator  proceeded  to  contest  the 
right  of  the  plaintiff  and  demanded  a  decision  affirming  the  nullity  of  the  seizure  as 
being  made  of  goods  legally  unseizable,  but  he  failed  in  his  pretensions  (judgment  of 
the  Civil  Tribunal  of  the  Seine,  9th  February,  1892,  Droit  10th  February;  confirm- 
ative decree  of  19th  July,  1892,  Droit  20th  July).    (See  Exhibit  10. ) 

And  the  seizing  creditors  appropriated  to  themselves  the  sum  seized  in  virtue  of 
the  rules  of  the  ordinary  law  (droit  commun). 

Besides  the  judicial  hypothecations,  there  could  be  (as,  in  fact,  there 
have  been)  pledges  of  the  personal  property  [nantisse?nents].  The 
Civil  Code  (art.  2071  et  seq.)  defines  the  rules  concerning*  these. 

There  is  also  the  turning  over  of  realty  in  order  that  the  fruits  may 
be  obtained  by  the  creditor  (Code,  2085  et  seq.);  but  the  canal  prop- 
erty, except  the  railroad,  was  not  producing  any  revenue,  and  the 
railroad  does  not  appear  to  have  been,  or  to  be  now,  in  the  hands  of 
other  than  the  railroad  company.  Besides,  the  interest  of  the  canal 
company  in  the  railroad  is  personal,  not  real — shares  of  stock. 

The  machinery,  etc.,  in  Panama  was  pledged  by  the  liquidator  to 
the  contracting  companies  working  on  the  Isthmus,  and  to  some  of 
these  were  pledged  30,500  shares  of  the  railroad  stock,  but  all  these 
matters  were  settled  in  order  to  turn  over  to  the  new  company  the 
unincumbered  railroad  shares  and  machinery,  etc.,  on  the  Isthmus. 

The  liquidator  gives  in  his  reports  the  details,  dates,  and  circum- 
stances of  these  transactions;  and  the  personal  property  and  plants, 
etc.,  at  Panama,  and  the  railroad  shares,  are  not  now  affected  by  nan- 
tissements  entered  into  by  the  liquidator  or  old  company. 

The  nantissements  or  givings  in  pledge  are  by  actual  turning  over  of 
personal  propert}T  and  are  not  registered.    The  evidence  of  discharge 


30 


PANAMA  CANAL  TITLE. 


is  in  the  office  of  the  liquidator,  and  the  statements  in  his  reports  have 
been  verified  by  examining  the  original  documents  there.  (Exhibits 
9,  10,  11,  12.)  ' 

But  the  question  of  hypothecations  of  the  real  property,  say  nothing 
of  conventional  hypothecations,  remains  to  be  discussed. 

Strange  as  it  may  seem  to  us,  no  allusion  is  made  in  any  of  the 
reports  to  an  ordinary  mortgage  of  the  large  amount  of  land  given  by 
Colombia.  As  a  source  of  revenue,  to  enable  the  company  to  construct 
the  canal,  such  a  mortgage  would  seem  to  us  very  natural,  but  I  have 
found  no  reason  to  believe  that  it  was  resorted  to.  The  record  would 
be  in  Panama,  but  it  is  improbable  that  no  allusion  should  be  made  to 
this  in  the  numerous  statements  of  assets,  receipts,  expenditures,  etc., 
if  such  a  mortgage  had  existed.  The  payment  of  interest  would  seem 
to  necessitate  such  allusions. 

This  may  be  accounted  for  by  the  vet  uncompleted  condition  of  the 
actual  transfer  of  lands  by  Colombia  to  the  company  and  by  the  popu- 
larity of  the  enterprise  and  the  ease  with  which,  up  to  within  a  short 
time  before  the  liquidation,  it  was  possible  to  float  bonds  issued  in 
pursuance  of  the  by-laws  of  the  old  company,  article  24,  which,  by  the 
way,  authorizes  loans  to  be  obtained  on  mortgage  by  the  general 
meeting. 

An  examination  has  been  made  into  the  nature  of  the  bond  issues 
and  copies  procured  of  the  bonds  themselves.  (Exhibit  13.)  No  allu- 
sion has  been  found  on  the  bonds  or  in  accounts  of  litigation  or 
elsewhere,  to  any  mortgage  or  hypothecation  of  the  real  property 
in  Panama,  except  two  unimportant  judicial  hypothecations  or  judg- 
ments which  can  be  inscribed  as  hypothecations.  (Exhibit  9.)  The 
complete  title  to  the  lands,  as  I  have  said,  has  never  really  passed  out 
of  Colombia,  the  expense  of  getting  that  title  put  into  final  form  hav- 
ing been  one  cause  of  the  delay. 

The  reports  of  the  liquidator  up  to  two  years  ago  (Exhibit  10)  set 
forth  the  judgments  out  of  which  judicial  hypothecations  might  have 
arisen,  including  judgments  obtained  in  courts  of  Panama;  whether 
all  of  them  or  not  is  a  question  which  has  not  been  overlooked.  (See 
Exhibit  9.) 

That  law  of  1893  merely  suspended  the  rights  of  action  of  the  indi- 
vidual creditors  and  turned  these  rights  over  to  the  mandataire  to  be 
exercised.  If  he  did  not  or  at  any  time  does  not  exercise  them  by  using 
them  to  oppose  or  affirm  something,  the  bondholders  and  general  cred- 
itors could  or  can  do  so,  upon  first  demanding  that  he  should  act,  and 
giving  him  a  month  in  which  to  make  up  his  mind. 

He  and  they  can  sue  (and  have  sued)  the  liquidator.  With  their 
suits  against  third  parties  owing  obligations  to  the  old  company  we 
are  not  particularly  concerned.    But  theoretically  he  or  they  could 


PANAMA  CANAL  TITLE. 


31 


make  use  of  the  suspended  proceedings,  including  any  judicial  hypoth- 
ecations, against  the  liquidator  and  the  property  of  the  liquidation, 
while  it  continued  to  be  the  property  of  the  liquidation. 

A  number  of  judgments  were  obtained  against  the  Liquidator  before 
the  act  of  July.  ls:i.°>.  by  bondholders  who  sued  to  recover  and  ob- 
tained judgment  for  the  total  of  their  subscriptions,  coupons  unpaid 
up  to  December  14,  1888  (date  of  going  into  liquidation),  and  legal 
interest . 

The  number  of  suits  is  stated,  and  the  names  of  the  plaint  ills,  in  his 
third  report  (Exhibit  1<>)-  These  names  are  Joreau,  Roger,  Francois, 
Donnadieu  and  Bougala,  Debrys.  Vaillant,  I  >enovarre,  Salleix-Laboige, 
Doumic.  Eighteen  other  plaintiffs  are  mentioned  in  the  same  report 
as  having  made  the  same  demand,  but  no  judgments  had  been  obtained 
by  them  when  all  these  were  suspended  by  the  law  of  July,  1893. 

In  the  nine  suits  in  which  judgment  had  been  rendered,  the  plain- 
tiffs  are  all  stated  to  have  proceeded  in  virtue  of  their  judgments  to 
garnishee  or  attach  property  in  the  hands  of  divers  persons,  and 
Mademoiselle  Joreau  had  attached  unissued  lottery  bonds  in  the  hands 
of  the  liquidator. 

From  these  nine  judgments  the  liquidator  appealed,  but  on  the 
29th  of  June,  1893  (two  days  before  the  special  law  was  passed),  the 
court  of  appeals  affirmed  the  judgments  (same  report,  Exhibit  10). 

It  is  evident  that  between  January  26,  the  date  of  the  judgment 
below,  and  July  1,  even  if  the  appeal  had  not  intervened  to  suspend 
previous  proceedings  in  execution  and  make  void  those  subsequent  to 
the  notice  of  appeal  (Beauchet,  sec.  1014),  it  is  improbable  that  much 
was  done  in  Panama  in  the  way  of  registering  judicial  hypothecations. 
After  that  the  mandataire  (for  the  benefit  of  all  the  bondholders) 
could  cause  these  judgments  to  be  made  executory  by  Panama  judg- 
ments, supposing  the  Colombian  law  to  be  identical  with  the  French. 
They  were  judgments  and  final,  since  it  is  evident  that  the  liquidator 
did  not  proceed  to  cassation  to  have  them  annulled. 

As  these  nine  judgments  might  possibly  have  been  for  an  enormous 
amount,  it  was  considered  important  to  carefully  examine  them  and 
their  results. 

The  real  property — at  least  that  in  which  we  are  interested  (there 
was  some  in  Paris  which,  by  suits  in  favor  of  some  contractors, 
became  affected  with  judicial  hypothecations  and  was  sold) — was  and 
is  not  in  France,  but  Colombia. 

I  append  a  certificate  from  the  Register  of  Hypothecations  of 
Panama  stating  that  no  hvpothecations  are  of  record  there.  (Exhibit 
14.)  _ 

It  is  theoretically  possible,  that,  before  the  real  estate  ceased  to 
be  that  of  the  old  company,  these  plaintiffs  or  the  mandataire  took 


32 


PANAMA.  CANAL  TITLE. 


measures  to  establish  judicial  hypothecations  under  the  law  of  Colom- 
bia, and  that  to  the  extent  of  the  indebtedness  to  them,  with  interest, 
the  real  property  there  and  all  improvements  that  have  been  or  may 
be  made  in  it,  were  mortgaged  in  this  way.  I  am  satisfied  that  such  is 
not  the  case..  (See  Exhibits  9,  10,  11,  12,  11.) 

As  for  judgments  subsequent  to  the  act  of  1893,  of  a  similar  char- 
acter, it  impossible  that  the  mandataire,  prior  to  the  date  of  the  contri- 
bution to  the  new  company,  took  a  similar  course,  and  also  possible 
that  creditors,  upon  his  failure,  did  the  same.  But  the  reports  of  the 
liquidator  indicate  nothing  of  this  kind,  and  the  comparatively  brief 
interval  between  the  appointment  of  the  mandataire,  M.  Lemarquis 
(July  4,  1893)  and  the  date  of  the  contribution  (October  20,  1894)  was 
occupied  with  other  things.  Among  these,  were  the  successful  proceed- 
ings by  him  and  the  liquidator  against  contractors  who  had  obtained 
money  of  the  company  which  it  was  alleged  they  were  not  entitled 
to  keep,  and  the  urgent  business  of  bringing  about  the  establish- 
ment of  the  new  company,  formed,  not  as  has  been  said,  of  the  same 
personnel  as  the  old  conipainT,  but  partly  of  contractors  who  had 
worked  for  the  old  company  and  were  being  sued  as  its  debtors  by  its 
representative,  the  liquidator.  With  all  these  matters  to  be  attended 
to,  the  mandataire  does  not  seem  to  have  had  time,  if  he  had  thought 
it  useful,  to  establish  judicial  hypothecations  in  Panama,  either  by 
using  the  judgments  of  the  nine  plaintiffs  above  referred  to  or  subse- 
quent judgments  based  upon  the  like  grounds  of  suit,  prior  to  Octo- 
ber 21,  1891.    (Same  Exhibits.) 

After  that  time  it  seems  clear  that  nothing  could  be  done  with  either 
the  nine  judgments  or  any  later  ones,  in  Panama  courts,  for  the  simple 
reason  that  the  liquidator  and  old  company  ceased  to  be  the  owners  of 
the  real  property  there. 

There  can  not,  of  course,  be  created  a  judicial  mortgage,  or  mort- 
gage of  any  kind,  as  to  property  which  does  not  belong  to  the  mortgagor. 

No  system  of  law  would  tolerate  that. 

If  there  are  judicial  hypothecations  arising  from  judgments  obtained 
in  France,  all  the  judgments  that  could  possibly  give  rise  to  them  are 
in  Paris  and  practically  all  in  the  office  of  one  tribunal.  A  careful 
inquiry  into  the  matter  develops  the  fact  that  the  judgments  referred 
to,  even  if  they  all  led  to  judicial  hypothecations,  are  for  the  insignifi- 
cant total  amount  of  about  §100,000  and  interest.  (Exhibit  9.)  But 
I  am  satisfied  that  there  are  no  such  liens  upon  real  property  on  the 
Isthmus,  except  upon  two  buildings,  and  as  to  these  buildings  the 
liquidator  promises  that  the  purchaser  shall  in  some  way  be  given  a 
clear  title.    (Exhibit  9.) 

The  fact  that  the  title  to  the  land  on  the  Isthmus  has  never  passed 
from  Colombia,  and  the  absence  of  all  allusion  to  a  mortgage  of  them, 
makes  it  reasonably  certain  that  they  are  not  mortgaged. 


PANAMA  CANAL  TITLE. 


33 


The  possess io?i  of  the  personal  property  in  Panama  by  the  new  com- 
pany, which  does  not  seem  to  be  doubtful,  which  possession  must  be 
turned  over  to  the  United  States  at  the  time  of  purchase,  is  inconsis- 
tent with  iHintisscnicntx  or  pledging*,  which  imply  the  loss  of  possession 
by  the  pledgor. 

Two  lines  in  the  Colombian  treaty  to  the  effect  that  the  United  States 
and  the  property  purchased  can  not  be  proceeded  against  in  the  courts 
of  Colombia  without  the  consent  of  the  Government  of  the  United 
States,  would  put  at  rest  all  danger  of  litigation  from  those  supposed 
persons  wrho,  having  some  technical  or  concealed  right,  which  in  fair- 
ness should  be  disclosed  before  the  purchase,  may  possibly  desire  after- 
wards to  bring  unjust  actions.  Congress  can  at  present  control  all 
suits  against  the  Government  in  the  United  States.  In  my  opinion, 
however,  the  danger  is  purely  imaginary. 

V.  The  objection  that  the  United  States  can  not  own  the  Panama 
Railroad  Company  because  it  is  a  State  corporation  does  not  seem  to 
be  very  seriously  relied  upon.  In  the  first  place,  the  United  States 
does  not  propose  to  become  the  corporation,  but  to  purchase  a  large 
part  of  the  stock  already  long  owned  by  a  canal  company.  That  the 
Government  can  own  stock  in  a  private  corporation  has  been  frequently 
recognized  by  our  courts.  In  fact,  it  is  difficult  to  see  why  it  can  not 
own  any  kind  of  property  it  may  have  need  of,  whether  individual  or 
corporate.  When  it  owns  stock  in  a  private  corporation  it  puts  itself 
on  a  level  with  the  other  stockholders  and  is  bound  like  them  by  the 
charter.  As  this  railroad  is  not  in  New  York,  but  in  a  foreign  coun- 
try, it  is  not  a  highway  of  New  York  and  so  a  public  institution  of 
New  York.  But  it  is  suggested  that  our  Government  contemplates 
destroying  the  railroad  and  can  not  do  that.  But  even  conceding  that 
it  could  not  (which  is  not  admitted,  however),  there  seems  to  be  no 
probability  that  the  Government  will  ever  dispense  with  the  railroad. 
It  will  continue  to  need  it  so  long  as  the  canal  will  be  operated.  At 
all  events,  it  is  not  so  obvious  that  it  will  be  destroyed  that  a  good 
title  can  not  be  taken  now  because  that  means  its  destruction.  It  may 
be  necessary,  as  it  has  been,  to  make  it  deviate  somewhat  from  its 
present  line;  it  may  become  less  remunerative  property;  but  all  that 
is  not  material  to  the  present  question  of  getting  a  good  title  to  some 
of  the  shares  of  stock.  The  French,  and  particularly  the  civil 
tribunal  of  the  Seine,  did  not  understand  that  the  construction  of 
the  canal  by  the  French  company  would  interfere  with  the  railroad, 
even  as  a  paying  concern.    (Exhibit  L.) 

If  the  ownership  of  the  stock  entails  any  conditions  as  to  the  con- 
tinued use  of  the  railroad,  these  can  be  performed  or  gotten  rid  of 
with  the  consent  of  the  State  or  minority  stockholders  interested. 
I  am  now  discussing  merely  the  legal  possibility  of  the  Government's 
acquiring  and  holding  the  stock;  and  I  think  that  is  clear. 

8751—02  3 


34 


PANAMA    CANAL  TITLE. 


VT.  The  objection  that  Congress  has  authorized  ;t  purchase  only 
from  1 1 10  new  company,  not  the  liquidator  of  the  old  company,  seems 
also  to  be  unsound. 

Our  Supreme  Court  has  frequently  held  that  a  law  must  have  a 
reasonable  interpretation  in  view  of  its  object  and  not  be  rendered 
abortive,  if  that  can  be  avoided. 

Certainly,  in  view  of  the  condition  of  the  title  as  hereinbefore 
explained,  the  purchase  will  be  from  the  new  company,  and  the  con- 
sent of  the  liquidator  will  be  at  most  a  waiver  of  rights  as  to  property 
transferred  to  the  new  company. 

But,  if  this  were  otherwise,  it  would  be  unreasonable  to  treat  the 
act  of  Congress  as  forbidding  a  purchase  from  the  new  company  in 
which  it  would  be  necessary  for  the  old  or  the  liquidator  to  join  as 
vendor.  This  would  be  to  defeat,  not  to  ascertain,  the  will  of  Con- 
gress. What  it  wants  is  a  good  title  from  the  owner  of  certain  speci- 
fied property,  the  owner  being  supposed  to  be,  and  being  admittedly 
in  part,  the  new  company;  and  it  is  entirely  justifiable  to  buy  from  the 
owner,  although  the  ownership  should  be  found  not  to  be  in  the  new 
company. 

Whether  we  think  it  is  in  the  new  company  or  the  old  company 
seems  to  me,  as  no  one  pretends  that  it  is  out  of  both,  altogether 
immaterial,  since  both  join  in  the  proposed  sale. 

The  general  meeting  of  the  now  company  reserved  the  right  to 
ratify  the  sale,  and  accordingly  it  will  be  necessary  to  have  further 
action  by  it.  Whether  it  should  effect  its  transfer  to  the  United 
States  through  one  formality  or  another,  and  what  should  be  done  as 
to  the  two  buildings  on  the  Isthmus  affected  by  judicial  hypotheca- 
tions, or  as  to  the  application  of  a  small  part  of  the  purchase  money 
to  the  payment  of  creditors  of  the  new  company — these  and  other 
details  of  conveyancing  can  be  considered  and  disposed  of  at  the 
proper  time.    They  in  no  way  affect  the  present  question. 

For  the  reasons  I  have  given,  I  am  of  opinion  that  the  United  States 
would  receive  a  good,  valid,  and  unencumbered  title. 
Very  respectfully, 

P.  C.  Knox, 

Attorney-  General. 


LIST  OF  PAPERS  ANNEXED. 


Page. 


Exhibit  1.  Objections  that  have  been  stated   37 

2.  Consultation  of  September  1,  1902,  by  Masters  Limbourg,  Du  Buit, 

Devin,  Thieblin,  and  Gontard   38 

3.  Laws  of  1867  and  1893  (France)  concerning  companies   61 

4.  Judgment  of  March  19,  1902  (civil  tribunal  of  the  Seine),  approv- 

ing Liquidator's  consent  to  sale   70 

5.  Judgment  of  July  3,  1902  (civil  tribunal  of  the  Seine),  deciding 

against  Donnadieu,  the  bondholder,  on  tierce  opposition   73 

6.  Argument  before  court  of  appeals  of  Paris  in  Donnadieu  case  and 

decree  of  that  court  of  August  5,  1902    88 

7.  Judgment  of  July  3,  1902  (civil  tribunal  of  the  Seine),  deciding 

against  Sautereau  and  certificate  of  an  attorney  that  he  did  not 
appeal  within  two  months   95 

8.  Judgment  of  March  8,  1889  (court  of  appeals  of  Paris),  declaring 

the  civil  character  of  the  old  Panama  Canal  Company   98 

9.  Certificates  of  August  21-30,  1902,  by  the  liquidator,  concerning 

judicial  and  other  mortgages,  pledges  of  personal  property,  and 
liens  in  general   103 

10.  Extracts  from  reports  of  the  liquidator,  showing  litigation  in 

France  and  Colombia,  pledges,  settlements  with  contractors,  etc.  115 

11.  Judgment  of  July  26,  1894  (civil  tribunal  of  the  Seine),  deciding 

against  Mile.  Joreau   142 

12.  Evidence  as  to  pledges  of  Panama  Railroad  shares   143 

Includes: 

Certificate  showing  payment  of  dividends. 
Agreement  of  April  27,  1895. 
Agreement  of  March  24,  1900. 

Ratification  of  the  agreement  of  March  24,  1900,  by  stock- 
holders' meeting  of  the  new  company. 
Judgment  approving  the  agreement  of  March  24,  1900. 

13.  List  and  specimens  of  bonds   151 

14.  Certificate  of  August  21,  1902,  by  the  register  of  documents  at 

Panama,  stating  no  mortgages  against  the  New  Panama  Canal 
Company   157 

A.  Extract  from  treatise  on  commercial  law   157 

B.  Special  act  of  July  1,  1893  (France),  relative  to  the  liquidation  of 

the  old  Panama  Canal  Company   158 

C.  Concession  of  1878  (Colombia)  and  extensions   161 

D.  Evidence  of  payments  to  Colombia  since  December  31,  1893   177 

E.  By-laws  of  the  old  Panama  Canal  Company   178 

F.  Law  of  June  8,  1888  (France),  authorizing  the  Old  Panama  Canal 

Company  to  issue  lottery  bonds   193 

G.  Judgment  of  December  15,  1888  (civil  tribunal  of  the  Seine), 

appointing  provisional  administrators  of  the  old  Panama  Canal 
Company   194 

H.  Judgment  of  February  4,  1889  (civil  tribunal  of  the  Seine),  dis- 

solving the  old  Panama  Canal  Company,  and  appointing  a 
liquidator  \   196 

I.  By-laws  of  the  New  Panama  Canal  Company   198 

J.  Minutes  of  the  organization  meetings  of  the  New  Panama  Canal 

Company   212 

K.  Judgment  of  June  29,  1894  (civil  tribunal  of  the  Seine),  approving 
contribution  by  the  liquidator  to  the  New  Panama  Canal  Com- 
pany  225 

35 


36 


PANAMA  CANAL  TITLE. 


I*itK»'. 


Exhibit  L.  Judgment  of  August  8,  1894  (civil  tribunal  of  the  Seine),  deciding 
against  various  tierce  oppositions  asking  to  have  set  aside  the 
judgments  of  June  29,  1894,  approving  the  contribution  l>y  the 
liquidator  to  the  new  company   232 

M.  Report  of  October  8,  1894,  by  cominissaires  appointed  by  the  New- 
Panama  Canal  Company  to  value  the  contributions  made  to  it 
by  the  liquidator   245 

N.  First  and  last  reports  ( 1895,  1901)  of  the  council  of  administration 

of  the  New  Panama  Canal  Company   259 

O.  Judgment  of  August  2,  1901  (civil  tribunal  of  the  Seine),  author- 
izing the  liquidator  to  consent  to  arbitration   275 

P.  Resolution  of  December  23,  1901,  of  the  council  of  administration 
of  the  New  Panama  Canal  Company,  to  agree  to  arbitrate  with 
the  liquidator   278 

Q.  Agreement  of  December  24,  1901,  regarding  arbitration   278 

R.  Award  of  arbitrators,  February  11,  1902    280 

S.  Last  report  (1901)  of  the  board  of  directors  of  the  Panama  Railroad 

Company   287 

T.  Official  proposal  of  sale  to  the  United  States   309 

U.  opinion  of  Maitre  Dubint  as  to  judgment  creditors  of  the  old 

Panama  Company   311 

V.  Opinion  of  M.  Waldeck-Rousseau  as  to  t he  objections  to  the  title 

proposed  to  be  given  to  the  United  States   313 


NOTE. 

Besides  the  papers  hereto  appended,  there  were  brought  from  Paris,  among  others, 
the  following  documents,  which  have  been  carefully  examined,  with  a  view  to  dis- 
covering any  objections  to  the  proposed  title,  but  which  it  is  deemed  unnecessary  to 
translate  or  print: 

(a)  Evidence  of  payments  to  Colombia  up  to  December  31,  1893.  (For  subse- 
quent payments,  see  Exhibit  D  above.) 

(b)  Document  of  August  19,  1876,  constituting  the  International  Interoceanic  Canal 
Company  (original  company). 

(c)  Transfer  of  concession  July  5,  1879,  by  the  original  company  to  the  old  Panama 
Canal  Company  (now  in  liquidation). 

(d)  Last  reports  (1887-88)  of  the  council  of  administration  of  the  old  Panama 
Canal  Company. 

(e)  Report  of  February  2, 1889,  of  the  provisional  administrators  of  the  old  Panama 
Canal  Company. 

(/)  Judgment  of  February  13,  1890  (civil  tribunal  of  the  Seine),  appointing  M. 
Monchicourt  coliquidator  with  M.  Brunet. 

(g)  Judgment  of  March  8,  1890  (civil  tribunal  of  the  Seine),  accepting  resignation 
of  M.  Brunet,  and  continuing  M.  Monchicourt  as  sole  liquidator. 

(h)  Judgment  of  July  21,  1S93  (civil  tribunal  of  the  Seine),  appointing  M.  Gau- 
tron  coliquidator  with  M.  Monchicourt. 

(i)  Judgment  of  July  1,  1893  (civil  tribunal  of  the  Seine),  appointing  M.  Lemar- 
quis  mandataire  of  the  bondholders. 

(j)  Judgment  of  February  18,  1889  (tribunal  of  commerce),  holding  that  the  old 
Panama  Canal  Company  was  of  a  commercial  character. 

(k)  Certificate  showing  subscription  of  60,000,000  francs  of  the  capital  stock  of  the 
New  Panama  Canal  Company. 

(/)  Judgment  of  January  5,  1900  (civil  tribunal  of  the  Seine),  appointing  M. 
Navarre  temporary  administrator  of  the  New  Panama  ('anal  Company,  and  evi- 
dence of  his  discharge  December  27,  1900,  and  of  the  election  of  a  new  council  of 
administration. 

(m)  Reports  (1890-1900)  of  the  council  of  administration  of  the  New  Panama  Canal 
Company. 

(n)  Panama  Railroad  Company:  Charter;  by-laws;  concession  of  1807  from  Colom- 
bia; list  of  directors  and  officers;  certificate  showing  amount  of  capital;  report  of  the 
board  of  directors  (1900).     (All  in  English.) 


EXHIBIT  1. 


OBJECTIONS  THAT  BAVE  BEEN  STATED. 

1.  That  the  obligation  of  the  new  company  growing  out  of  the  con- 
tribution of  the  canal  is  such  that  the  company  not  being  bankrupt, 
but  a  going  concern,  claiming  to  be  able  to  complete  the  canal,  that 
company  can  not  free  itself  from  the  obligation  Iry  selling  the  property. 
It  must  have  been  contemplated  that  the  company  would  spend  in  the 
completion  of  the  canal  $150,000,000  or  more,  and  that  the  completed 
canal  would  pay  large  dividends  and  thus  give  the  stock  and  bonds  of 
the  old  company  large  value. 

2.  That  under  the  principles  of  law  recognized  in  America  a  corpo- 
ration chartered  to  carry  on  a  work  of  national  interest  can  not  transfer 
the  whole  of  its  property  and  rights  to  any  one.  The  same  principle 
is  supposed  to  apply  to  French  corporations  chartered  to  carry  on 
such  affairs  in  France  and  the  principle  is  supposed  to  extend  to  this 
canal,  although  not  in  France. 

3.  It  is  claimed  that  the  lottery  bond  law  requiring  materials  for  the 
canal  to  be  obtained  in  France,  either  shows  that  no  sale  to  the  United 
States  could  be  made  under  the  law  of  France  or  only  a  sale  subject  to 
that  requirement. 

4.  That  the  new  compan}^  is  simply  the  old  one  reorganized  and, 
therefore,  upon  principles  of  law  recognized  in  America,  has  all  the 
obligations  of  the  old  one  and  can  not  give  any  title  free  from  those 
obligations,  especially  to  the  purchaser  of  the  whole  of  its  property 
and  rights. 

5.  That  the  French  court  has  no  jurisdiction  to  authorize  a  solvent 
company  to  sell  all  of  its  property  in  violation  of  the  existing  agree- 
ment to  construct  the  canal,  and  the  liquidator  can  not  enter  into  a 
contract  by  which  the  whole  nature  of  the  original  contract  of  contri- 
bution is  changed,  and  the  French  court  has  no  jurisdiction  to  authorize 
him  to  do  so. 

6.  If  the  United  States  should  purchase  the  propert}1-  of  the  new 
company  charged  as  it  is  with  a  trust,  being  the  old  company  reorgan- 
ized, suit  could  be  brought  in  the  United  States  by  the  cestuis  que 
trust,  and  under  "Thomas  v.  R.  R.,"  101  U.  S.,  etc.,  the  sale  would  be 
treated  as  void  because  ultra  vires,  and  the  property  taken  to  satisfy 
the  trust.  (Central  Transportation  Company  v.  Pullman  Palace  Car 
Company,  139  U.  &,  24;  Railroad  v.  Hooper,  160  U.  S.,  514.) 

7.  The  Panama  Railroad  Company  being  a  New  York  corporation 
the  Government  of  the  United  States  can  not  become  its  owner  for 
similar  reasons. 

8.  The  new  company  can  not  sell  without  the  consent  of  the  French 
Government,  the  enterprise  being  national.  This  national  character 
is  shown  by  the  declarations  of  Colombia  in  its  concession  that  the 
canal  and  railroad  are  of  public  utility,  and  the  following  in  article  18 

'67 


38 


PANAMA  CANAL  TITLE. 


of  the  canal  concession,  "As  this  enterprise  is  essentially  international 
for  public  utility,  it  is  understood  that  it  shall  be  always  kept  free 
from  political  influences." 

9.  "In  taking  over  a  corporation,  if  such  a  thing  can  he  done,  we 
take  over  the  property  subject  to  all  encumbrances  and  become  bound 
to  execute  all  its  agreements." 

10.  The  contract  of  the  liquidation  for  the  stockholders  and  bond- 
holders of  the  old  company  with  the  new  company  to  pay  for  their 
benefit  00  per  cent  of  the  net  profits  of  operating  the  canal,  iixed  in 
them  a  vested  right  to  these  net  profits  that  no  court  and  no  Legisla 
ture  could  violate.  (Bedford  Building  and  Loan  Association,  181 
U.  S.,  227.) 

11.  In  Kailroad  v.  Chicago  Railroad  Company  (163  U.  S.,  581),  the 
Supreme  Court  say:  Railroad  corporations  possess  the  powers  which 
are  expressly  conferred  by  their  charters,  together  with  such  powers 
as  are  fairly  incidental  thereto,  and  they  can  not,  except  with  the  con- 
sent of  the  State,  disable  themselves  from  the  discharge4  of  the  func- 
tions, duties,  and  obligations  which  they  have  assumed"  (citing 
Thomas  v.  Railroad  Company,  101  U.  S.,  71). 

12.  An  honest  debt  is  never  extinguished  until  it  is  paid,  and  we 
can  not  place  our  feet  in  the  shoes  of  the  Panama  Canal  Company  and 
take  over  this  property  without  first  being  satisfied  that  this  debt  is 
paid,  or  that  it  has  been  released  by  the  bondholders  and  stockholders 
of  that  company. 

13.  Further,  it  is  feared  in  a  general  way  that  the  property  in  the 
hands  of  a  purchaser  will  be  liable,  or  the  purchaser  will  be  liable,  to 
indefinite  claims,  liens,  and  demands  of  bondholders,  stockholders,  and 
creditors  of  both  companies. 

14.  It  is  said  that  the  law  of  Congress  authorizes  a  purchase  from 
the  new  company  and  that  the  property  has  become  again,  owing  to 
the  recent  agreements  between  the  liquidation  and  the  new  company, 
the  property  of  the  old  company  or  liquidator. 


EXHIBIT  2. 

CONSULTATION  OF  SEPTEMBER  1,  1902,  BY  MASTERS  LIMBOTJRG,  DU 
BUIT,  DEVIN,  THIEBLIN,  AND  GONTARD. 

The  undersigned,  advocates  of  the  court  of  appeals  of  Paris,  being 
consulted,  in  view  of  divers  objections  made  in  America  to  the  project 
of  cession  of  the  Panama  Canal  by  the  new  company  to  the  Government 
of  the  United  States,  upon  the  following  questions: 

1.  Has  the  new  company  a  certain  and  absolute  title  of  ownership 
to  the  concessions,  the  works  of  the  canal,  and  all  the  other  properties 
which  it  is  proposed  to  sell  and  transfer  to  the  United  States? 

2.  Has  it  the  power  to  make  that  sale  and  transfer? 

3.  Is  it,  from  any  point  of  view,  a  reorganization  of  the  old  com- 
pany I 

4.  Are  the  properties  which  it  has  acquired  from  the  old  company 
burdened,  since  the  contribution,  with  the  debts  and  charges  of  the  old 
company;  is  it,  in  any  manner  whatever,  bound  by  those  debts  and 
charges  ? 

5.  Is  the  old  or  the  new  company  a  national  company,  with  the  conse- 
quence that  this  national  character  restrains  or  diminishes  the  right 


PANAMA  CANAL  TITLE. 


39 


of  ownership,  of  administration,  and  the  power  of  sale  of  the  proper- 
ties of  the  company  ? 

6.  Have  the  recent  agreements  between  the  new  company  and  the 
liquidator  (December  21, 1901)  and  the  judicial  proceedurea  affecting 
them,  by  which  the  liquidator  has  compromised  with  the  new  com- 
pany as  to  the  contractual  obligations  contracted  by  the  hitter  toward 
the  former  in  the  terms  of  the  original  contribution  contract,  invalidated, 
or  changed  in  any  way  whatever,  the  title  of  the  new  company  acquired 
by  the  original  contribution,  and  had  the  liquidator  the  capacity  to 
conclude  that  agreement  of  the  21th  of  December,  1901? 

7.  Does  the  law  of  June  8,  1888,  extend  to  the  new  company  and 
bind  it?   Will  that  law  extend  to  its  vendee  and  bind  it? 

8.  Does  there  exist  in  France  a  jurisdiction  having  competence  to 
revise  the  acts  of  the  legislative  power;  especially  can  the  law  of 
July  1,  1893,  be  declared  void  by  any  jurisdiction  whatever? 

Considering  the  questions  submitted,  together  with  all  questions  of 
law  that  can  arise  from  the  project  of  cession,  involved  in  a  study  of 
the  following  three  points: 

1.  Constitution,  nature,  and  legal  existence  of  the  New  Panama 
Canal  Company. 

2.  Existence  and  extent  of  its  right  of  ownership  over  the  prop- 
erties which  it  is  proposed  to  cede. 

3.  Existence  and  extent  of  its  right  of  disposition  as  to  those 
properties; 

It  being  proper,  without  regard  to  the  order  of  the  questions  sub- 
mitted, to  proceed  to  a  methodical  and  complete  study  of  those  three 
points,  and  afterwards  briefly  to  discuss  the  statements  made  in  the 
course  of  that  study,  and  the  conclusions  to  be  drawn  from  them 
which  respond  to  the  questions  submitted,  give  the  following  opinion: 

Chapter  I. 

CONSTITUTION,  NATURE,  AND   LEGAL  EXISTENCE   OF  THE  NEW  PANAMA 

CANAL  COMPANY. 

The  New  Panama  Canal  Company  was  constituted  definitively  on 
October  20,  1891. 

By  the  terms  of  its  by-laws,  filed  with  Messrs.  Lefebvre  and  Cham- 
petier  de  Bibes,  notaries  at  Paris,  the  26th  of  June,  1891,  it  is  an 
anonymous  commercial  company  governed  by  the  laws  of  the  21th  of 
July,  1867,  and  1st  of  August,  1893  (article  1  of  the  by-laws). 

In  France  anon}Tmous  commercial  companies  formerly  required  an 
authorization  by  the  Government  under  article  37  of  the  Code  of 
Commerce. 

But  this  article  was  abrogated  by  the  law  of  the  21th  of  July,  1867 
(article  47),  and  article  21  of  the  same  law  provides  that  "in  future 
anonymous  companies  can  be  formed  without  the  authorization  of  the 
Government." 

Since  then  anonymous  companies  have  been  constituted  freely  in 
France,  without  an}r  intervention  of  the  public  authorities,  by  means 
of  the  mere  agreement  of  parties  and  the  fulfillment  of  legal  formali- 
ties, namely, 

The  by-laws  of  the  company  which  form  the  compact  are  first 
established  thereby  or  by  the  founders  of  the  compan}T. 

Then  if  a  stock  company  is  in  question,  there  is  an  emission  of  shares 


4(1 


PANAMA   CANAL  TITLE. 


of  stock  representing  the  capital;  the  company  can  not  be  constituted 
until  after  the  subscription  of  the  total  capital  and  the  payment  by 
each  stockholder  of  the  fourth  at  least  of  the  shares  bv  him  subscribed 
(articles  1  and  24,  law  of  July  24,  1867). 

This  subscription  and  these  payments  are  shown  in  a  declaration 
made  by  the  founders  of  the  companyin  a  notarial  document  (articles 
1  and  24,  law  of  duly  24.  1867). 

A  meeting,  called  the  first  general  constitutive  meeting,  to  which 
are  called  all  the  shareholders,  is  convoked  to  establish  the  subscription 
and  the  payment  of  one-fourth  and  to  name  commissaircs  charged  to 
make  a  report  upon  the  contributions  which  do  not  consist  of  money. 
(Articles  1  and  24,  law  of  July  24,  1807). 

A  second  meeting,  called  the  second  general  constitutiye  meeting, 
is  afterwards  conyoked  to  hear  and  approve  the  report  of  the  commis- 
saircs charged  with  verifying  the  contributions  and  to  name  the  first 
administrators.    (Article  25,  law  of  July  24,  1867.) 

The  company  is  at  this  moment  definitively  constituted;  no  more 
remains  but  to  fulfill  the  formalities  of  publication  required  by  article 
35  of  the  law  of  July  24.  1S07.  namely: 

Deposit  in  the  clerks'  offices  of  the  tribunal  of  commerce  and  of  the 
justice  of  peace  of  the  place  in  which  the  company-  is  established  of  a 
copy  of  the  constitutive  document,  to  which  are  annexed  a  copy  of  the 
notarial  document  showing  the  subscription  and  payment  of  one-fourth, 
a  copy  of  the  minutes  of  the  deliberations  of  the  general  constitutive 
meetings,  a  list  of  the  names  of  all  the  stockholders  of  the  company. 

Finally,  a  copy  of  the  constitutive  document  and  of  the  papers 
annexed  is  published  in  the  newspapers  designated  to  receive  legal 
announcements.    (Article  56,  law  of  July  24,  1867.) 

These  different  formalities  are  to  be  fulfilled  within  a  month  of  the 
constitution  of  the  company. 

The  French  Government  remains  a  complete  stranger  to  the  forma- 
tion of  companies.  It  is  thus  that  the  New  Panama  Canal  Company 
has  been  freely  constituted,  without  the  Government's  intervening  in 
any  way  in  its  formation.  It  has  not  been  the  subject  of  any  special 
law,  and  it  has  not  had  the  benefit  of  any  favor  or  any  patronage  of 
the  state. 

This  abstention  does  not  appear  only  from  the  condition  of  the  legis- 
lation. It  is  put  in  relief  by  certain  significant  documents  and  under 
solemn  circumstances  which  it  is  not  without  interest  to  mention. 

Already  in  1880,  a  short  time  before  the  constitution  of  the  Uni- 
versal Company  of  the  Interoceanic  Canal,  the  French  Government, 
by  a  letter  of  its  diplomatic  representative  in  the  United  States,  dated 
March  22,  officially  declared  to  the  Secretary  of  State  of  the  United 
States  44  that  it  wos  not  in  any  manner  interested  in  the  enterprise  and 
that  it  did  not  propose  to  intervene  in  it  or  give  it  any  support  either 
directly  or  indirectly."    (See  opinion,  Sullivan  and  Cromwell.) 

Later,  the  Government  anew  exhibited  in  a  manner  more  clear,  at 
the  time  the  law  of  July  1,  1893,  concerning  the  liquidation  of  the 
Universal  Company  of  the  Interoceanic  Canal  was  under  discussion, 
that  it  intended  to  remain  a  total  stranger,  in  the  future  as  in  the  past, 
to  the  enterprise  of  the  Panama  Canal,  an  enterprise  which  it  consid- 
ered as  one  of  pure  and  simple  private  concern. 

Thus,  in  the  session  of  March  4,  1893,  of  the  Chamber  of  Deputies, 
M.  Deloncle  having  proposed  an  amendment  to  article  10,  M.  Bour- 


PANAMA  CANAL  TITLE. 


41 


geois,  keeper  of  the  seals,  minister  of  justice,  opposed  that  amendment 
as  indicating  a  line  of  conduct  to  the  liquidator,  saying:  "The  Gov- 
ernment and  the  public  authorities  have  declared  that  they  do  not  wish 
to  take  any  responsibility  in  this  matter"  (that  of  Panama),  and  adding, 
with  the  assent  of  the  Chamber,  "If  the  amendment  of  M.  Ueloncle  is 
adopted,  we  depart  from  the  attitude  which  the  Government  has  con- 
tinuallv  followed  up  to  the  present."  (Good!  good!)  (Official  Journal 
of  March  5,  1893,  p.  846.) 

Thus,  again,  in  the  same  session,  M.  Viette,  minister  of  public 
works,  opposing  a  motion  presented  by  M.  Moreau,  looking  toward 
the  formation  of  a  commission  of  verification  by  the  ministry  of  public 
works,  said,  with  the  same  assent: 

"I  shall  not  constitute  a  commission  in  the  name  of  the  Government, 
because  the  Government  should  remain  a  total  stranger  to  the  Panama 
matter"  (Good!  good!).    (Official  Journal  of  March  5,  1893,  p.  8-17.) 

There  is,  then,  but  an  examination  to  be  made  to  learn  whether  the 
new  company,  at  the  time  of  its  formation,  conformed  to  all  the  pro- 
visions and  formalities  required,  and  whether,  consequently,  it  was 
regularly  constituted. 

The  legal  conditions  set  forth  above  have  been  fulfilled,  as  follows: 

1.  The  by-laws  of  the  company  were  drawn  up  in  a  notarial  docu- 
ment in  the  presence  of  Masters  Lefebvre  and  Champetier  de  Ribes, 
notaries  at  Paris,  the  26th  of  June,  1894. 

2.  A  public  subscription  of  600,000  shares,  forming  the  money  cap- 
ital of  the  company  (the  50,000  others  being  set  apart  to  the  Govern- 
ment of  Colombia),  was  opened  on  the  22d  of  September,  1894,-  and 
completely  subscribed.  The  fourth  part  of  this  subscription  was  paid 
in  by  each  shareholder. 

3.  The  declaration  of  the  subscription  of  the  capital  and  payment  of 
one-fourth  was  received  b}T  Masters  Lefebvre  and  Champetier  de 
Ribes,  notaries  at  Paris,  on  June  29,  1894. 

4.  The  first  constitutive  meeting,  held  October  4,  1894,  recognized 
the  genuineness  of  that  declaration  and  selected  commissaires  charged 
to  appraise  the  contributions  made  by  M.  Gautron. 

5.  The  second  general  constitutive  meeting,  held  October  20, 
approved  the  report  presented  by  the  commissaires  and  appointed  the 
first  administrators. 

At  that  moment  the  company  was  definitively  constituted. 

Finally,  to  make  sure  that  the  formalities  of  legal  publication  were 
carried  out,  it  suffices  to  refer  to  the  journal  of  legal  announcements, 
"Les  Petites  Affiches,"  No.  730,  October,  1894. 

Thus  is  established  in  a  manner  beyond  doubt  both  the  commercial 
character  (altogether  private)  of  the  New  Panama  Canal  Compan}'  and 
the  regularity  of  its  constitution  of  date  October,  1894. 

Since  that  date  its  existence  has  continued  without  any  interruption 
or  change,  and  the  company  is  at  present  in  possession  of  all  its  powers 
and  juridical  rights.  , 

The  incident  of  the  appointment  of  M.  Navarre  as  provisional 
administrator  in  1900,  which  ma}T  be  misunderstood  in  the  United 
States,  merits  an  explanation  of  its  true  character  and  its  lack  of  all 
importance. 

In  February,  1900,  the  members  of  the  council  of  administration, 
disagreeing  in  opinion,  resigned  in  a  body,  and,  not  to  leave  the  com- 
pany without  regular  representation  and  direction,  asked  the  tribunal 


42 


PANAMA  CANAL  TITLE. 


of  commerce  to  appoint  a  provisional  administrator  charged  with  con- 
voking the  general  meeting  of  stockholders  to  elect  a  new  council. 

It  was  on  this  initiative  that  M.  Navarre  was  appointed,  and  not  on 
the  intervention  of  creditors  or  stockholders,  nor  by  the  spontaneous 
action  of  the  judicial  authority.  This  appointment  did  not  imply, 
then,  in  any  way,  the  suspension  of  the  life  of  the  company.  (Sec  judg- 
ment of  February  5,  L900.) 

M.  Navarre^  made  haste,  conformably  with  his  purely  provisional 
and  tentative  commission,  to  convoke  the  general  meeting  in  order 
that  it  might  elect  a  new  council. 

And  this  council  having  been  elected,  he  made  report  to  it  of  his 
administration,  and  his  commission  was  at  an  end,  and  this  incident, 
wholly  within  the  company,  which  had  given  occasion  to  his  appoint- 
ment, was  closed. 

The  proceeding  taken  in  that  matter  is  of  frequent  use.  It  is  taken 
whenever  a  council  of  administration  considers  it  its  duty  to  retire 
spontaneously  in  the  course  of  company  transactions. 

Chapter  II. 

EXISTENCE  AND  EXTENT  OF  THE  BIGHT  OF  OWNERSHIP  OF  THE  NEW 
COMPANY  AM)  THE  PROPERTIES  WHICH  ARE  TO  BE  THE  SUBJECT  OF 
THE  CESSION. 

The  right  of  ownership  of  the  New  Panama  Canal  Company  as  to 
the  concession  of  the  interoceanic  canal  and  the  other  properties  which 
it  is  proposed  to  cede  to  the  Government  of  the  United  States  is  no 
less  clear  than  its  own  existence. 

This  right  results  from  the  contribution  made  to  it  by  the  liquidator 
of  the  Universal  Company  of  the  Interoceanic  Canal  when  the  new 
company  was  constituted. 

We  have  to  dwell  upon  this  contribution  for  the  reason  that  the 
greater  part  of  the  objections  we  are  to  examine  are  derived  from  a 
misconception  of  its  regularity,  its  character,  its  extent,  and  its  effects. 

This  contribution,  which  is  no  other  than  a  sale,  was  made  by  M. 
Gautron,  liquidator  of  the  Universal  Company  of  the  Interoceanic 
Canal,  to  the  New  Panama  Canal  Company,  in  the  following  terms. 
(Article  5  of  the  by-laws.) 

*  ******* 

Three  questions  can  be  stated  apropos  of  the  contribution  thus 
made : 

1.  Had  the  liquidator  the  power  to  make  it? 

2.  Has  it  been  regularly  made? 

3.  What  are  its  effects? 

1.  Question.  Had  M.  Gautron,  liquidator  of  the  Universal  Company 
of  the  Interoceanic  Canal  of  Panama,  the  right  to  make  to  the  New 
Panama  Canal  Company  the  contribution  of  the  greater  part  of  the 
assets  of  the  Universal  Company? 

To  clearly  decide  this  question  it  will  suffice  to  state  with  precision 
the  facts  and  applicable  principles. 

The  dissolution  of  every  company  leads  necessarily  to  the  settlement 
of  its  affairs.  It  is  this  settlement,  preliminary  to  a  distribution, 
intended  to  prepare  for  one  and  to  lead  to  one,  by  assuring  the  realiza- 
tion of  the  company  assets,  which  essentially  constitutes  liquidation. 


PANAMA   CANAL  TITLE. 


43 


During*  this  settlement  the  social  being  continues  to  exist.  It  sur- 
vives for  the  requirements  of  liquidation.  (Paul  Pout,  Traite  des 
Socit'lrs,  No.  1930  et  seq.;  Vavasseur,  Traite*  des  Soci6t6s,  No.  246; 
I  [oupin,  Traite*  des  Societies,  No.  203;  Cassation,  May  29,  1865;  Sirey, 
1865, 1,  325.  See  also  Cassation,  July27,1863,  Sirey,  63, 1, 457;  Febru- 
ary 3,  LS<>8,  Dalloz,  1868,  1,225;  December  22, 1868, Dalloz,  69,  1, 156; 
March  23,  L870,  Dalloz,  70,  1,  1415;  March  6, 1872,  Dalloz,  72, 1, 169; 
February  8,  1875.  Dalloz,  75,  1,  3<>8;  May  17,  1877,  Sirey,  77,  1,  356; 
August  16,  1880,  Dalloz,  82,  1,  80;  December  18,  1883,  Sirey,  1886, 
L,  27;  March  11,  1894,  Dalloz,  84,  1,  199;  December  2,  1885,  Sirey, 
88,  L,  331;  January  13,  1892,  Sirey,  92,  1,  100;  May  24,  1892,  Sirey, 
92,  1,  469.) 

These  are  assured  principles. 

But  who  is  to  make  this  settlement?  Who  will  represent  the  social 
body  while  it  is  going  on? 

Who,  in  other  words,  Ay  ill  be  the  liquidator?  The  French  legisla- 
tor has  not  established  rules  to  govern  the  conditions  of  liquidation; 
"he  has  referred  to  the  condition  of  liquidation  in  several  texts." 
(Code  of  Commerce,  article  64;  law  of  1867,  article  67.)  He  has  not 
regulated  it  or  even  defined  it  in  any.  Consequently,  in  default  of 
legislative  provisions,  it  is  from  practice,  general  principles,  decisions 
of  the  courts,  that  we  must  ask  the  solution  of  the  numerous  difficul- 
ties to  which  the  business  of  liquidation  gives  rise.    (Pont,  No.  1934.) 

'.'Being  a  mandataire  (agent)  of  the  company,  which  he  represents  in 
the  interest  of  the  members,  the  liquidator  ought,  in  principle,  to  be 
appointed  by  them."    (Pont,  No.  1,  937.) 

No  difficulty  arises  if  the  original  company  agreement  designates  or 
permits  to  be  designated  the  liquidator,  or  if  the  members  are  in 
accord  in  choosing  one. 

But  if  they  are  too  numerous  to  act  themselves  and  do  not  get  into 
accord,  there  is  litigation,  and  then  it  is  necessarily  requisite  to  apply 
to  public  justice — to  the  tribunals — the  civil  tribunal  if  a  civil  com- 
pany is  in  question,  the  commercial  tribunal  if  a  commercial  company 
is  in  question.  (See  Pont,  No.  1942;  Houpin,  No.  205,  and  authorities 
and  decrees  cited.) 

The  tribunal  thus  acquiring  possession  of  the  matter  becomes  sub- 
stituted for  the  members;  it  acts  in  the  plenitude  of  their  rights;  it 
can  then  confer  upon  the  liquidator  all  the  rights  that  the  circum- 
stances seem  to  require  him  to  have  and  the  original  company  agree- 
ment permits. 

Besides,  although  appointed  by  a  court,  the  liquidator  is  none  the 
less  the  representative  of  the  company  in  the  interest  of  the  associates, 
responsible  with  regard  to  them  for  the  execution  of  his  commission 
and  free  to  act,  under  that  responsibility,  within  the  limits  of  his 
powers,  with  the  right,  upon  occasion,  to  ask  to  have  those  enlarged 
by  the  tribunal  from  whom  he  obtains  them. 

As  for  the  powers  of  the  liquidator,  it  can  be  laid  down  as  a  general 
proposition  that,  in  the  absence  of  special  provisions  or  express  reser- 
vations, they  extend  to  all  acts,  to  all  operations  that  may  be  necessary 
for  the  settlement  of  the  affairs  of  the  company.  (See  Paul  Pont,  Traite 
des  Societes,  Nos.  1934,  1952,  et  seq.)  The  measure  of  those  powers 
is  obtained  from  the  object  he  is  charged  to  accomplish. 

Consequently  he  has  not  merely  the  power  of  conducting  the  busi- 
ness of  the  compan}T.    He  has  and  should  have  the  power  of  disposal, 


44 


PANAMA  CANAL  TITLE. 


for  that  power  is  necessary  to  reach  a  realization  of  the  assets  and  a 
payment  of  the  debts,  which  it  is  his  business  to  accomplish.  He  can 
alienate,  and  alienate  even  the  immovable  property  of  the  company,  at 
least  where  there  is  no  prohibition  against  that  in  the  by-laws  or  in  the 
terms  of  his 'appointment.  (See  Pont,  No.  1957;  Houpin,  No.  208; 
Gas.,  July  24,  L871;  Sirey,  1871,1,  47.) 

Judicial  decisions  recognize,  moreover,  his  power  to  realize  the  com- 
pany assets  by  means  of  a  contribution  en  bloc  to  a  new  company. 
(See  Cas.,May  12, 1896;  Off.  Houilleres  des  Rives de  Gier  et  Houflleres 
de  St.  Chamand.  Revue  des  Societes,  1896,  1,  356.) 

These  principles  having  been  established,  let  us  turn  to  the  facts: 

The  Universal  Company  of  the  Interoceanic  Canal  was  constituted 
on  the  3d  of  March,  1881,  under  the  anonymous  form,  with  a  capital 
of  300,000,000,  according  to  the  by-laws  received  by  Masters  Cham- 
petier  de  Ribes  and  Mavot  de  la  Querantonnais.  notaries  at  Paris,  the 
20th  of  October,  1880. 

On  the  11-th  of  December,  1888,  it  suspended  payment  and  asked  the 
tribunal  to  appoint  provisional  administrators. 

Appointed,  these  administrators  called  the  stockholders  to  an  extra- 
ordinary general  meeting  for  the  26th  of  January,  1899,  in  order  to 
take  such  measures  as  the  situation  of  the  company  required;  that  is 
to  say,  to  declare  its  dissolution  and  arrange  for  its  liquidation.  To 
make  sure  of  the  quorum  necessary  to  the  valid  constitution  of  that 
meeting,  that  is  to  say,  the  one-half  of  the  capital,  making  use  of  the 
power  given  them  by  article  69  ot  the  by-laws,  the  provisional  admin- 
istrators called  to  the  meeting  the  owner  of  even  a  single  share  and 
gave  to  their  call  all  desirable  publicity.  (See  first  report  of  Monchi- 
court,  pp.  27  to  30). 

Notwithstanding  these  efforts,  the  extraordinary  general  meeting 
could  not  be  regularly  constituted,  the  half  of  the  capital  not  being 
found  represented. 

However,  the  meeting,  such  as  it  was,  manifested  its  wishes  by 
adopting  the  following  resolution: 

"Third.  The  meeting,  while  it  can  not  deliberate,  announces  the 
desire  that  the  Universal  Company  of  the  Interoceanic  Canal  of  Pan- 
ama may  be  dissolved,  that  a  liquidator  may  be  appointed,  with  the 
most  extensive  powers  to  make  any  contract,  cede  part  or  the  whole 
of  the  present  company's  assets,  by  way  of  contribution  or  otherwise, 
to  a  new  company,  for  the  best  interests  of  the  company,  and  that 
M.  Brunet  ma}7  be  chosen  as  liquidator,  with  the  power  to  ask  in  the 
proper  place  for  the  addition  of  one  or  more  other  liquidators." 

It  was  in  these  circumstances  .that,  the  meeting  of  stockholders  not 
being  able  to  constitute  itself,  the  Universal  Company  being  conse- 
quently unable  to  act  itself  and  to  take  the  measures  which  the  situa- 
tion demanded,  that  is  to  say.  to  dissolve  itself  and  put  itself  in  the 
condition  of  liquidation,  certain  of  the  stockholders  asked  the  civil 
tribunal  of  the  Seine,  conformably  to  article  37  of  the  law  of  July 
24,  1867,  to  pronounce  the  dissolution  and  the  placing  in  liquidation 
of  the  Universal  Company  and  the  appointment  of  a  liquidator  for  it. 

In  this  state  of  affairs,  by  a  judgment  of  February  -1,  1889,  the  tri- 
bunal pronounced  the  dissolution  and  the  placing  in  liquidation  of  the 
company,  and  named  M.  Brunet  liquidator,  "with  the  most  extensive 
powers,  especialh'  to  cede  or  contribute  to  a  new  company  the  whole 
or  part  of  the  company  assets,  to  make  or  ratify  with  the  contractors 


PANAMA  CANAL  TITLE. 


45 


for  making  the  Panama  Canal  any  agreement  having  in  view  the  con- 
tinuation of  the  work,  and,  with  this  end,  to  issue  any  bonds  and  make 
any  pledges  of  personal  property." 

This  judgment  was,  in  substance,  but  the  carrying  out,  in  spirit  and 
almost  in  language,  of  the  resolution  which  the  meeting  of  January  26, 
powerless  to  validly  deliberate,  had  passed  under  the  form  of  an  expres- 
sion of  desire. 

Thus  the  powers  given  to  the  liquidator,  Brunet,  clearly  cany  the 
general  right  to  alienate  the  company  assets,  and  especially  the  right 
to  alienate  them  by  way  of  contribution  to  a  new  company. 

Then  we  know  how  these  powers  were  transmitted  to  M.  Gautron. 

We  know,  that  is,  how  M.  Monchicourt  was  named  on  March  8, 
L890,  as  liquidator  in  place  of  M.  Brunet,  who  had  resigned;  how 
M.  Gautron  was  joined  with  M.  Monchicourt  as  coliquidator  on  July 
21,  1893;  how,  finally,  M.  Gautron  has  remained  since  that  date  sole 
liquidator  of  the  Universal  Company — always  with  the  powers  con- 
ferred by  the  judgment  of  February  i,  1889. 

Undoubtedly  this  careful  explanation  suffices  to  set  at  rest  all  doubt 
of  the  power  and  the  rights  of  Liquidator  Gautron. 

But  this  is  not  all. 

This  power  of  the  liquidator,  this  right  to  cede,  has  been  sanc- 
tioned by  the  highest  power  we  recognize  in  France,  the  legislative 
authority. 

And  this  brings  us  to  speak  of  the  law  of  July  1,  1893,  concerning 
the  liquidation  of  the  Universal  Company  of  the  Interoceanic  Canal  of 
Panama. 

That  law,  passed  b}T  the  Chamber  of  Deputies  at  its  sessions  of  the 
2d  and  1th  of  March,  1893,  adopted  with  amendments  by  the  Senate 
on  May  29,  1893,  returned  to  the  Chamber  and  passed  by  it  as  it  came 
from  the  Senate  on  the  29th  of  June,  1893,  was  completed  by  its  pro- 
mulgation on  July  2, 1893,  conformably  to  the  provisions  of  the  decree 
of  5th  and  11th  of  November,  1870,  concerning  the  promulgation  of 
laws  and  decrees.    (Article  1,  Civil  Code.) 

Its  authority  binds  all;  no  one  can  contest  its  legality;  our  constitu- 
tion does  not  contain  a  power  analogous  to  that  of  the  high  court  of 
the  United  States.  Only  the  legislative  power  can  with  us  revise  a 
law  regularly  passed  and  proclaimed. 

We  know  under  what  circumstance's  that  law  of  July  1,  1893,  was 
passed. 

The  Universal  Company  of  the  Interoceanic  Canal  of  Panama  has 
assumed  the  anonymous  commercial  form,  but  it  was  a  civil  company 
by  reason  of  its  object,  and  its  form  could  not  put  out  of  sight  that 
character,  as  our  legislation  stood  prior  to  August  1,  1893.  It  was 
only  at  this  last  date  that  a  new  law  decided  that  the  anonymous  com- 
mercial form  carried  with  it  the  commercial  character  of  even  com- 
panies civil  by  their  objects. 

The  civil  tribunal  of  the  Seine  was  right  in  recognizing  that  c  ivil 
character  in  its  judgment  of  February  4,  1889,  naming  M.  Brunet  as 
liquidator. 

And  the  court  of  appeals  of  Paris,  getting  possession  of  an  appeal, 
not  from  the  decision  of  the  civil  tribunal,  but  from  a  judgment  of  the 
commercial  tribunal  of  the  Seine  of  February  18,  1889,  denying  that 
character,  recognized  and  formally  declared,  in  its  turn,  by  decree 
of  March  8,  1889,  that  the  Universal  Company  of  the  Interoceanic 


46 


PANAMA  CANAL  TITLE. 


Canal  of  Panama  constituted  a  civil  company.  (Paris,  1  ch.,  March  8, 
L889,  Receuil  de  Sirey,  1889,  2,  225.) 

The  rules  concerning  the  liquidation  of  commercial  companies  differ 
from  those  applicable  to  civil  companies.  They  render  the  former 
liquidation  more  easy  and  rapid  by  simplifying  the  operations,  and  are, 
from  that  fact,  more  favorable  to  the  interests  involved.  The  state  of 
the  law  did  not  in  1893  permit  the  liquidation  of  the  Panama  ( Jompany, 
a  civil  company,  to  have  the  benefit  of  these  rules,  and  the  great  value 
of  the  enterprise,  the  enormous  number  of  the  shareholders,  bond- 
holders, and  creditors,  caused  this  Legal  impossibility  to  be  regretted. 
This  gave  rise  to  special  measures  for  an  exceptional!  situation,  and  a 
special  law  arranged,  upon  fixed  lines,  the  liquidation  of  the  Panama 
Company. 

This  law,  asked  for  by  the  liquidator,  M.  Monchicourt,  from  1892, 
the  subject  of  bills  introduced  by  individual  members  (those  of  Kamel 
and  Roger  de  FAube),  submitted  finally  by  the  Executive  to  the 
Chamber  of  Deputies  on  the  20th  of  February.  1893,  and  adopted  by 
the  Chamber  and  Senate,  with  some  modifications,  is  the  law  of  July  1, 
1893. 

After  having,  by  a  happy  borrowing  from  the  law  of  bankruptcy, 
suspended  by  its  first  article  all  suits  begun  by  bondholders  and  other 
creditors  of  the  Universal  Company,  whether  against  the  Liquidator  as 
such,  against  the  administrators  to  enforce  their  responsibility,  for 
restitution  against  outside  parties,  or  any  other  kind,  as  well  as  the 
proceedings  for  preservation  or  execution  against  the  properties  of 
the  company,  this  law  treats,  under  two  different  heads,  of — 

1.  The  liquidator. 

2.  The  mandataire  of  the  bondholder-. 

The  title  treating  of  the  liquidator  regulates  for  the  best  interest 
of  all  the  two  important  operations  belonging  to  him — realization  of 
assets  and  distribution— placing  the  former  under  the  authority  and 
control  of  the  civil  tribunal  of  the  Seine. 

It  is  thus  worded: 

"Article  1<».  Every  act  of  realizing  assets,  every  contract  carrying 
a  cession  or  contribution  of  the  whole  or  part  of  the  company  assets 
performed  by  the  liquidator  of  the  Universal  Company  of  the  Inter- 
oceanic  Canal  of  Panama,  shall  be  submitted  to  the  approval  of  the 
civil  tribunal  of  the  Seine,  which  shall  decide  in  public  session,  after 
a  report  by  one  of  the  judges. 

"Article  11.  Every  judgment  of  approval  rendered  in  pursuance  of 
the  preceding  article  shall  be  published  within  ten  days  in  the  Official 
Journal  and  the  Official  Journal  (Commune  edition). 

"'It  may  be  attacked  by  tierce  opposition  within  not  to  exceed  one 
month  after  the  publication,  by  the  stockholders,  by  the  mandataire 
of  the  bondholders,  and  by  the  other  creditors  of  the  company!  The 
tribunal  shall  decide  summarily  within  a  month.  The  appeal  must  be 
interposed  within  ten  days  from  the  notification  of  the  judgment  to 
the  party  personally  or  at  his  domicile." 

Is  it  not  evident  that  in  providing  for  and  submitting  to  the  approval 
of  the  tribunal  by  these  articles  "contracts  carrying  a  cession  or  con- 
tribution of  the  whole  or  part  of  the  company  assets,  made  by  the 
liquidator  of  the  Universal  Company  of  the  Interoceanic  Canal."  the 
legislator  has  recognized  and  in  some  sort  consecrated,  although  that 
was  not  necessary,  the  power  and  right  acquired  by  the  liquidator 


PANAMA   CANAL  TITLE. 


47 


under  the  general  rules  of  law,  expressly  referred  to  in  the  decisions 
of  the  courts  investing  him  with  his  functions,  to  alienate  the  com- 
pany assets  by  way  of  contribution  to  a  new  company? 

Thus,  principles,  the  act  of  appointment,  finally  the  special  law.  affirm 
the  power  and  the  right  of  M.  Gautron,  and  legitimize  his  interven- 
tion in  the  constitutive  agreement  of  the  New  Panama  ( Janal  ( Jompany, 
for  the  purpose  of  contributing  to  that  company  pail  of  the  company 
assets  of  the  Universal  Company. 

M.  Gautron  had,  then,  the  power  to  make4  the  contribution  which  he 
did  make. 

In  the  title  treating"  of  the  mandataire  of  the  bondholders,  the  act  of 
July  1,  1893,  provides  for  the  protection  of  the  most  interesting  credit- 
ors of  the  Universal  Company,  the  bondholders,  during  the  course  of 
the  liquidation  of  the  said  company. 

On  one  hand,  it  gives  to  the  mandataire  alone  the  rights  of  action 
belonging  to  the  bondholders,  and  it  accords  to  this  mandataire,  for 
that  purpose,  the  benefit  of  judicial  assistance. 

On  the  other  hand,  it  leaves  to  all  and  to  each  of  the  bondholders  the 
right  to  intervene  in  the  proceedings  instituted  by  the  mandataire  and 
to  institute  all  proceedings,  in  case  the  mandataire,  having  been  noti- 
fied to  proceed  and  given  time  for  that  purpose,  neglects  or  refuses  to 
do  so. 

Finally,  it  recognizes  in  the  mandataire  alone  the  right  to  proceed 
to  execution  in  case  of  judgments  in  favor  of  the  bondholders,  even 
when  they  have  acted  upon  his  default,  and  individually  obtained 
judgments.  But  it  provides  at  the  same  time  that  the  mandataire 
shall  pay  over  to  the  liquidation  all  sums  he  may  receive,  and  leaves 
the  bondholders,  taken  singly,  the  right  to  produce  their  claims  before 
the  liquidator  and  receive  directly  all  dividends  which  may  be  coming 
to  them. 

Thus  all  dangers  are  provided  against,  it  should  be  noted,  without 
the  bondholders,  to  whom  the  most  effective  aid  and  protection  are 
afforded,  being  deprived  of  any  advantage;  they  are  merely  prevented 
from  establishing,  contrary  to  the  natural  law  of  equality,  and  we 
may  say,  contrary  to  the  most  elementary  equity,  a  situation  of  indi- 
vidual preference  to  that  of  the  mass  of  bondholders,  by  executing 
for  the  exclusive  benefit  of  some,  judgments  which  they  may  obtain 
and  by  which  all  ought  to  profit. 

It  may  be  drawn  from  this  part  of  the  law  of  July  1,  1893,  that  all 
alienations  consented  to  by  the  liquidator,  with  the  approval  of  the 
tribunal,  are  definitive  and  can  be  set  up  against  all  creditors,  persons 
in  privity  and  stockholders  of  the  Universal  Company.  All  rights  of 
these  different  kinds  of  persons  as  to  the  assets  of  the  Universal  Com- 
pany are  irrevocably  concluded  by  such  an  alienation.  Their  rights 
no  longer  exist  except  as  against  the  liquidator  and  only  as  to  the 
products  of  the  liquidation. 

SECOND  QUESTION. 
REGULARITY  OF  CONSTITUTION. 

M.  Gautron,  having  power  to  make  the  contribution,  as  we  have 
demonstrated,  it  only  remains  to  see  if  he  has  done  so  in  conformity 
with  the  formalities  prescribed  by  the  law  of  1893. 


48 


I'ANAMA  CANAL  TITLE. 


Has  the  Liquidator  asked  and  obtained  the  approval  required  l>v  that 
law;  is  the  judgment  of  approval  definitive? 

This  approval  was  given  by  the  civil  tribunal  of  the  Seine  by  judg- 
ment of  June  29,  1894,  copied  by  Messrs.  Sullivan  &  Cromwell  us  an 
exhibit  to  their  brief,  pages  L65  et  seq. 

The  judgment  of  approval  was  published  pursuant  to  article  11  of 
the  law  in  the  Official  Journal,  and  Official  Journal  (Commune  edition) 
in  the  issues  of  July  1,  1894. 

The  judgment  was  attacked  by  divers  tierce-oppositions  pursuant  to 
the  text  of  said  article  11. 

The  civil  tribunal  of  the  Seine,  deciding  upon  these  tierce-opposi- 
tions, declared  them  without  just  foundation  by  a  judgment  of  August 
8,  1894,  upholding  in  all  its  terms  and  provisions  the  judgment  of 
June  29,  1894. 

Finally,  no  appeal  having  been  taken  from  the  judgment  of  August 
8,  1894,  within  the  time  allowed  by  article  11,  that  judgment  has 
passed  into  res  adjudicata.  and  the  approval  given  by  the  judgment  of 
June  29,  L894,  has  become  definitive. 

No  one  in  France  would  be  permitted  to  contest  it. 

THIRD  QUESTION. 

EFFECTS  OF  TI1E  CONTRIBUTION. 

What  are  the  effects  of  the  contribution  thus  made? 

In  principle  the  contribution  to  a  company  of  a  certain  and  deter- 
mined property  or  collection  of  properties  carries  an  alienation,  a  trans- 
fer of  ownership,  to  the  benefit  of  the  company. 

This  transfer  operates  inter  partes,  according  to  general  principles 
of  law,  the  obligation  to  contribute  being  an  obligation  to  give  by 
the  very  force  and  effect  of  the  agreement. 

That  is,  the  contribution  is  in  all  respects  similar  to  a  sale  (Article 
1845  of  the  Civil  Code).  Let  us  say,  briefly,  the  contribution  is  a 
sale.  It  is  a  sale  in  which  the  price  may  consist  either  in  a  fixed  sum 
or  in  a  stipulation  for  part  of  the  profits  of  carrying  out  the  com- 
pany's project. 

A  contribution  can  be  pure  and  simple.  It  can  also  be  subjected  to 
conditions  upon  which  it  will  be  suspended  or  undone. 

Briefly,  here,  as  in  the  case  of  a  sale,  there  is  full  and  complete 
libeiTy. 

The  agreements  are  the  law  of  the  parties. 

This  is  the  principle  formulated  in  Article  1134  of  the  Civil  Code, 
an  essential  principle  of  our  law,  giving  rise  to  numerous  consequences 
and  applications,  and  never  to  be  lost  sight  of  in  the  present  examina- 
tion. 

This  being  stated,  if  we  look  at  the  agreements  which  have  been 
made  we  find: 

That  the  parties  have  stipulated  "that  the  New  Panama  Canal  Com- 
pany shall  be  the  owner  of  the  properties  and  rights  ceded  and  con- 
tributed from  the  day  of  its  definitive  constitution,"  with  a  single 
reservation  concerning  the  rights  as  to  the  Panama  Railroad; 

That  the  contribution  of  these  latter  rights,  thus  differing  from  that 
of  the  other  rights  and  properties,  was  made  under  a  condition  upon 
which  they  were  to  return,  the  said  rights  to  become  fully  vested  in 


PANAMA  CANAL  TITLE. 


49 


the  new  company  upon  the  completion  of  the  canal  or  the  payment  of 
tlic  sum  of  Fr.  20,000,000,  otherwise  to  return  to  the  liquidation. 

We  have  seen  that  the  New  Panama  (anal  Company  was  definitely 
constituted  on  the  20th  of  October,  1894. 

We  hence  conclude,  with  absolute  assurance: 

That  from  that  date  it  became  the  owner  of  the  properties  con- 
tributed, the  definitive  and  unchangeable  owner  of  all  the  properties 
other  than  the  rights  in  the  Panama  Railroad,  owner  under  the  condi- 
tion of  finishing  the  canal  or  paying  the  Fr.  20,000,000  of  the  rights  in 
the  Panama  Railroad,  this  being  the  simple  application  of  article  1583 
of  the  civil  code,  according  to  which  the  ownership  of  the  sold  object 
is  transferred  to  the  vendee  as  soon  as  the  two  parties  have  reached 
an  agreement  as  to  the  matter  and  the  price,  "although  the  price  hay 
not  been  paid;" 

That  from  the  same  date  the  Universal  Company  of  the  Inter- 
oceanic  Canal  of  Panama,  represented  by  its  liquidator,  has  ceased  to 
be  the  owner  of  the  properties  contributed,  except  as  to  the  condition 
concerning  the  Panama  Railroad,  and  that  the  ownership  of  the  prop- 
erties contributed  has  been  definitely  replaced  in  its  assets  by  the  price 
of  them — that  is  to  say,  by  a  right  to  a  part  of  the  profits  which  was 
given  in  return  for  its  contribution. 

It  can  not  be  argued  that  this  participation  in  the  profits  implies 
any  retention  whatever  of  ownership  by  the  liquidator. 

The  liquidator,  contributor  of  the  properties  whose  cession  is  pro- 
posed, is  completely  deprived  of  his  rights  in  the  properties  in  favor 
of  the  new  company.  According  to  French  law,  he  who  should  con- 
sent to  that  contribution  in  consideration  of  getting  a  certain  number 
of  paid-up  shares,  giving  him  rights  equal  to  those  of  other  share- 
holders, would  not  less  lose  entirely  the  ownership  of  the  properties 
contributed,  this  ownership  resting  exclusively  in  the  social  being,  the 
new  company;  the  concurrence  of  such  contributor  in  a  subsequent 
sale  of  a  part  of  the  assets  of  that  company  is  a  thing  unknown  to 
French  law,  and  we  are  convinced  that  it  is  the  same  in  every  system 
of  law.  The  contributor  has,  in  that  case,  only  the  rights  belonging 
to  every  stockholder,  as  long  as  he  keeps  possession  of  his  shares,  but 
all  personal  right  as  contributor  and  former  owner  is  definitively 
annihilated  as  to  him. 

For  much  stronger  reasons  is  this  the  case  for  a  contributor  who 
in  exchange  for  his  contribution  does  not  become  a  holder  of  shares 
or  parts  of  the  company  assets,  and  contents  himself  with  a  participa- 
tion in  the  profits  resulting  from  his  contribution.  Such  a  contribu- 
tor becomes  interested  in  the  results;  he  does  not  possess  a  part  of  the 
ownership  of  the  company  funds,  and  his  right  is  resolved  into  an  obli- 
gation to  him  of  the  company,  of  which  he  is  not  even  a  member. 

The  ownership  resides,  then,  exclusively  in  the  person  of  the  com- 
pany, distinct  from  that  of  the  associates;  neither  they,  nor,  for  a 
stronger  reason,  one  who  is  simply  interested  in  the  results,  as  is  the 
liquidator,  possesses  any  particle  of  that  ownership. 

Nor  can  any  argument  be  drawn,  either,  according  to  the  same  line 
of  thought,  from  the  power  stipulated  in  favor  of  the  liquidator, 
during  the  making  of  the  canal,  to  have  a  commission  of  his  own 
charged  to  inspect  the  progress  of  the  works,  the  condition  and  care 
of  the  materiel  and  immovable  property,  as  well  as  the  accounts  con- 

8751—02  1 


50 


PANAMA  CANAL  TITLE. 


cerning  these  matters  (article  5  of  the  by-laws),  for  this  arrangement 
is  explained  by  the  inability  in  w  hich  the  Legislator  would  otherwise 
find  himself,  by  reason  of  the  very  nature  of  his  rights,  to  exercise, 
during  the  period  of  construction,  an  inspection  which  the  value  of 
the  obligation  owing  to  him  nevertheless  makes  legitimate,  and  which 
would  not  be  sufficiently  obtained  during  that  period  from  a  mere 
examination  of  balances  and  writings.  This  power  in  no  way  nega- 
tives the  idea  of  a  definitive  alienation;  on  the  contrary,  the  circum- 
stance that  it  became  the  object  of  a  special  stipulation  corroborates 
the  fact  of  a  complete  alienation  of  the  ownership.  If  a  single  particle 
of  ownership  remained  in  the  liquidator,  he  could,  as  co-owner,  inspect 
without  any  stipulation. 

Thus  the  contribution  undoubtedly  substitutes  the  New  Panama 
Canal  Company  in  all  the  rights  of  ownership  of  the  Universal  Com- 
pany of  the  Interoceanic  Canal  of  Panama. 

Is  it  by  a  counterstroke,  substituted  in  the  whole  or  a  part  of  the 
obligations  and  personal  charges  contracted  or  assumed  by  the  latter 
on  account  of  the  properties  ceded? 

No,  beyond  a  doubt. 

As  a  general  rule,  the  personal  obligations  of  a  debtor  burden  only 
his  representatives  properly  so  called,  his  representatives  by  law  or 
convention,  such  as  the  heir,  the  universal  legatee,  the  vendee  en  bloc 
of  his  situation  with  regard  to  assets  and  debts.  lie  who  becomes  the 
vendee  of  a  particular  object  is  subjected  only  to  the  real  charge-, 
inherent  in  the  said  object,  stipulated  in  the  contract  and  inseparable 
from  its  possesion. 

A  simple  acquirer  of  properties,  specified  individually  and  byname, 
the  New  Panama  Canal  Company  can  not  be  held  bound  except  for  the 
payment  of  the  price  agreed  upon;  the  personal  obligations  of  its 
vendor  do  not  concern  it. 

To  represent  the  new  compan}^  as  continuing  tne  person  of  the  Uni- 
versal Company,  whether  we  consider  the  new  company  as  a  reorgani- 
zation of  the  Universal  Company  or  we  regard  it  as  the  acquirer  of 
the  totality  of  the  goods  of  the  old  company,  would  be  to  fall  into  a 
manifest  error  as  a  matter  of  fact.    This  can  be  easily  understood. 

1.  Nothing  less  resembles  the  reorganization  of  the  Universal  Com 
pany  than  the  formation  of  the  new  company,  entirely  distinct  from 
the  preceding.    In  reality,  French  law  and  practice  are  unacquainted 
with  what  in  England  and  the  United  States  is  called  reorganization. 

Out  of  tw^o  things,  one;  either  the  old  company  exists  alone  and 
complete,  or  a  company  entirely  new  has  been  constituted.  In  the 
first  place,  we  f  requently  see  that  the  old  capital  is  reduced  in  a  greater 
or  less  amount  and  a  new  capital  is  called  in  by  subscription,  but  in 
this  case  the  company  continues  to  exist  as  a  moral  person;  nothing  is 
changed  in  its  existence;  its  debts  continue  to  burden  it  as  in  the  past; 
the  creditors  do  not  change  their  character,  and  at  least  if  they  have 
not  consented  to  a  remission  of  the  debts,  their  rights  undergo  and 
can  undergo  no  modification. 

In  the  present  case  it  is  useless  to  insist  upon  showing  that  the  Uni- 
versal Company  has  not  been  reorganized;  on  the  contrary,  it  has  been 
dissolved  by  judgments  which  have  passed  into  the  force  of  res  adju- 
dicata.  It  has  then  ceased  to  live  except  for  the  requirements  of  liqui- 
dation, ordained  by  the  same  judgment;  it  is  then  true  (to  make  use 
of  an  expression,  which  this  time  is  just)  that  no  power  in  the  world  * 


TANAMA  CANAL  TITLE. 


51 


can  give  back  an  active  existence  to  the  Universal  Company.  Its 
liquidator  has  received  a  commission  to  realize  its  assets  and  pay  its 
debts  by  means  of  the  product  of  realization  and  to  the  extent  that 
that  product  will  permit.  He  could  not  then,  not  baving  any  author- 
ity for  that,  reorganize  the  Universal  Company,  a  thing  he  could  not 
do  without  the  concurrence  of  the  old  stockholders  and  the  subscribers 
to  the  new  capital.  Nothing  of  the  kind  has  taken  place.  It  can  then 
be  affirmed  that  the  new  company  is  not  a  reorganization  of  the  old 
company,  and  that  consequently  the  new  company  does  not  find  itself 
ipso  facto  burdened  with  the  debts  and  engagements  of  the  Universal 
Company. 

2.  It  is  no  more  correct  to  say  that  the  new  company  is  the  successor 
by  universal  title  of  the  Universal  Company  because  it  has  taken  all 
the  assets  and  by  that  very  fact  has  become  bound  for  all  its  engage- 
ments. 

As  a  matter  of  fact,  it  may  be  remarked  that  an  important  part  of 
the  assets  of  the  Universal  Compan}T — the  lottery  bonds — have  not 
been  transferred  to  the  new  commny.  This  circumstance  alone  puts 
an  end  to  the  objection. 

But  it  is  proper  to  go  further,  for  even  admitting  that  the  liquida- 
tor of  the  Universal  Company  has  transferred  to  the  new  company  the 
totality  of  the  goods  of  the  former,  it  would  not  result  that  the  other 
company  is  a  universal  successor  bound  for  the  debts,  obligations,  and 
charges  of  the  former  company. 

It  is  not  to  be  forgotten  that  the  Universal  Company  was  not  solvent; 
that  it  was,  on  the  contrary,  in  judicial  liquidation  after  having  sus- 
pended its  payments;  that  a  special  law  was  necessary  to  withdraw 
this  liquidation  from  the  pursuits  of  unpaid  creditors  and  from  the 
forced  sale  of  its  properties.  If  it  is  an  indisputable  principle  that  he 
who  takes  the  whole  assets  of  a  debtor  and  substitutes  himself  for  that 
debtor  by  an  agreement  freely  entered  into  between  them,  assumes  the 
totality  of  the  debts,  it  is  a  principle  no  less  indisputable  that  he  who 
buys  the  assets  of  a  bankrupt  or  a  person  in  judicial  liquidation  does 
not  owe  anything  to  the  creditors  of  the  bankrupt  beyond  the  price  of 
what  he  buys,  a  price  it  is  the  business  of  the  liquidator  to  divide 
according  to  the  rights  of  those  concerned. 

Such  is  the  situation  of  the  new  company  with  regard  to  the  liqui- 
dator of  the  Universal  Company  and  with  regard  to  its  creditors.  This 
is  what  has  already  been  declared  by  the  judgment  of  the  4th  of  Feb- 
ruary. lbSil,  which  pronounced  the  dissolution  and  the  liquidation; 
this  is  what  has  been  confirmed  by  the  law  of  the  1st  of  JuhT,  1893. 

And  it  is  for  that  very  reason— that  is  to  say,  that  the  creditors  have 
no  other  gage  than  the  product  of  the  realization — that  the  legislator  of 
1893,  in  order  to  guarantee  the  personal  creditors  of  the  Universal 
Company  against  the  consequences  of  a  contribution  which  would 
alienate  their  gage  without  giving  them  a  sufficient  compensation,  did 
not  content  himself  with  protecting  them  by  the  requirement  of  the 
approval  of  the  tribunal.  It  moreover,  aside  from  any  idea  of  fraud, 
and  merely  for  the  defense  of  their  interest,  conferred  the  right  to  inter- 
vene by  way  of  tierce  opposition  to  the  judgment  of  approval,  and 
submit  to  the  tribunal  any  objections  they  might  have  to  the  proposed 
alienation. 

Thus,  the  New  Panama  Canal  Company  has  not  been  substituted  in 
the  debts  of  the  Universal  Company  of  the  Panama  Canal.  Those 


52 


PANAMA   CANAL  TITLE. 


debts  remain  at  the  exclusive  charge  of  the  Liquidation.  The  only 
charges  which  burden  it  are  those  which  were  formally  transferred 
to  it  as  conditions  of  the  contribution  (art.  5  of  the  byrlaws). 

We  find  here  only  the  charge  of  the  sum  remaining  due  to  the 
Colombian  Government  as  the  price  of  the  prorogation  of  the  eon- 
cession  granted  April  4,  1893. 

There  are  no  others. 

Consequently,  it  La  necessary  to  conclude,  without  hesitation,  that 
all  the  personal  debts  of  the  Universal  Company,  other  than  the  above- 
mentioned  debt  to  the  Colombian  Government,  remain  at  the  exclusive 
charge  of  the  liquidation. 

This  is  especially  true  of  the  entire  bonded  indebtedness. 

And  that  which  we  say  of  debts,  a  fortiori,  we  may  say  of  the 
charges  not  constituting  debts  properly  so  called,  which  the  Universal 
Company  may  have  assumed  in  the  course  of  its  existence. 

We  desire  to  speak  here  especially  of  the  charge  imposed  upon  the 
Universal  Company  by  the  law  of  dune  8,  ls.S8,  concerning  the  issuing 
of  lottery  bonds  to  buy  in  France  the  materiel  necessary  for  the 
works,  a  charge  absolutely  personal  and  connected  with  the  use  of  the 
lottery  bonds,  of  which  the  new  company  does  not  possess  one.  This 
obligation  is,  then,  necessarily  extinct  with  the  life  of  the  Universal 
Company,  upon  which  alone  it  rested,  to  the  existence  of  which  it 
was  in  some  manner  inherent. 

It  is  thus  that  the  vendee  of  a  house  in  course  of  construction  does 
not  assume,  by  his  purchase,  the  consequences  of  a  contract  which  his 
vendor  has  made  with  the  contractor  for  its  construction  or  with  an 
establishment  for  the  furnishing  of  materials.  A  formal  stipulation 
is  necessaiy  for  such  a  purpose.  This  could  not  be  imposed  upon  the 
new  company  by  the  liquidator  of  the  Universal  Company,  and  it  has 
not  been  imposed  upon  it.  as  a  reading  of  article  5  of  the  by-laws 
makes  clear. 

We  repeat  that  the  lottery  bonds,  which  were  the  occasion  and  the 
raison  d'etre  of  the  obligation  concerning  the  materials  were  excepted 
from  the  contribution  and  have  remained  the  exclusive  property  of 
the  liquidation. 

Thus  the  properties  contributed  passed  into  the  hands  of  the  New 
Panama  Canal  Company  absolutely  free  from  the  personal  indebted- 
ness and  personal  charges  binding  the  Universal  Company. 

Let  us  add  that  these  properties  are,  moreover,  not  burdened  with 
any  privileged  debt  or  mortgage,  nor  any  jus  in  re  or  jus  ad  rem,  and 
that  their  transfer  has  been  made  regular,  with  regard  to  third  parties, 
by  the  fulfillment  of  the  formalities  required  in  Colombia. 

Thus,  and  to  recapitulate,  on  this  third  question,  we  conclude: 

That  the  New  Panama  Canal  Company  is  the  owner  of  the  proper- 
ties and  rights  which  it  is  proposed  to  cede  to  the  United  States  of 
America: 

That  these  properties  are  free  in  its  hands  from  all  the  engagements 
and  personal  debts  of  the  Universal  Company  of  the  Interoceanic 
Canal  of  Panama: 

And  that  they  are  not  and  can  not  be  burdened  with  any  other  debt 
or  charge  than  the  privileged  debts  or  mortgages  which  may  have 
been  registered  according  to  the  laws  of  the  Republic  of  Colombia. 

Let  us  add,  finally,  that  the  transfer  of  the  concession  and  properties 
of  the  Universal  Company  of  the  Interoceanic  Canal  of  Panama  to 


PANAMA  CANAL  TITLE. 


53 


the  New  Panama  Canal  Company  has  been  formally  recognized  by  the 
Government  of  the  Republic  of  the  United  States  of  Colombia. 

The  right  of  ownership  of  the  new  company  has  moreover  been  for- 
mally confirmed  by  the  prorogation  of  theconcession  granted  on  April 
25,  L900,  to  the  New  Panama  Canal  Company  by  that  Government. 
(Brief  of  Sullivan  and  Cromwell,  Exhibits,  pp.  99  et  seq.) 

Chapter  III. 

EXISTENCE  AND  EXTENT  OF  THE  NEW  PANAMA  CANAL  COMPANY'S  RIGHT 

OF  DISPOSAL. 

Wo  have  proven  that  the  New  Panama  Canal  company  is  the  full 
and  complete  owner  of  the  concession  and  other  properties  the  cession 
of  which  to  tin1  Government  of  the  United  States  is  proposed. 

Can  it  freely  dispose  of  its  properties  and  effect  by  itself  the  pro- 
posed cession? 

The  right  of  ownership,  "right  to  use  and  abuse,"  according  to  the 
Roman  phrase,  "right  to  enjoy  and  dispose  of  things  in  the  most  abso- 
lute way."  according  to  the  terms  of  article  544  of  the  Civil  Code, 
implies  naturally  the  right  to  freely  alienate. 

That  right  is  considered  in  France  as  of  public  interest.  The  owner 
can  not,  in  principle,  renounce  it  by  agreement.  (Aubry  &  Rau,  11, 
pp.  175-11*1;  argument,  art.        1591,  and  1598  of  the  Civil  Code.) 

It  is  immaterial,  moreover,  whether  that  owrner  is  a  physical  being 
or  a  moral  being — a  company.  The  principles  and  rules  of  decision 
are  the  same. 

Then,  in  principle,  and  by  the  mere  fact  that  we  have  proven  the 
right  of  ownership  of  the  New  Panama  Canal  Company,  we  can  affirm 
its  right  of  free  disposal.  But  we  encounter  here  certain  objections, 
drawn,  some  from  the  very  object  and  the  existence  of  the  eompany, 
and  others  from  the  rights  given  to  the  liquidation  of  the  Universal 
Company  by  the  original  company  agreement. 

Let  us  examine  them. 

The  objections  taken  from  the  object  and  existence  of  the  company 
are  two — 

The  first  is  based  upon  the  fact  that  the  proposed  cession  will  put 
out  of  existence,  along  with  the  company  assets,  the  very  object  of  the 
company. 

It  is  clearly  true  that  the  making  of  the  proposed  cession  by  the 
New  Panama  Canal  Company  to  the  United  States  will  result  in  put- 
ting an  end  to  the  company's  object  and  consequently  draw  with  it  the 
dissolution  of  the  new  company.  But  there  is  nothing  in  this  that, 
either  legally  or  under  the  by-laws,  is  impossible.  In  principle,  a 
company  constituted  with  a  view  to  a  specified  object  and  for  a  speci- 
fied term  should  exist  until  the  extinction  of  that  object  or  expiration 
tion  of  that  term.    (Article  1865  of  the  Civil  Code.) 

But  that  principle,  whose  strict  application  can  be  conceived  of  in 
the  case  of  associations  of  persons,  can  not  be  so  rigorously  enforced 
in  the  case  of  associations  of  capitals,  without  presenting  the  most 
serious  inconveniences  and  even  the  greatest  dangers,  for  there  may 
arise,  in  the  course  of  the  existence  of  a  company,  even  of  the  most 
flourishing  kind,  circumstances  in  which  it  will  be  advantageous  and 
expedient  to  put  an  end  to  the  enterprise  or  transmit  it  to  others  by 


54 


PANAMA  CANAL  TITLE. 


alienation.  And  the  legislator  has  provided  for  that  case  in  the  law 
of  July  24,  1867,  for  anonymous  companies.  By  the  terms  of  article 
31  of  that  law,  "The  meetings  which  are  to  deliberate  upon  the  altera- 
tion of  the  by-laws  or  on  propositions  to  continue  the  company  beyond 
the  term  fixed  for  its  duration,  or  its  dissolution  before  that  time,  can 
not  be  regularly  constituted  and  can  not  deliberate  validly  unless  com- 
posed of  a  number  of  shareholders  representing  the  half  at  least  of  the 
capital  of  the  company." 

What  does  this  signify,  except  to  recognize  in  the  general  meeting  — 
that  is  to  say,  in  a  part  only  of  the  associates — the  right  to  put  an  end 
to  the  compan3r  existence  for  whatever  reason  may  please  it,  whether 
of  expediency  or  some  other  kind,  without  regard  to  the  nonaccom- 
plishment  of  the  object  of  the  company  or  the  noncompletion  of  the 
term  fixed?  (On  the  powers  of  the  extraordinary  general  meeting, 
Cassation  of  May  30,  1892,  Journal  des  Societes,  1892,  p.  405,  Dalloz, 
1893,  I,  105,  with  note  of  M.  Tholler;  Cassation  of  January  29,  1894, 
Journal  des  Societes,  1894,  p.  209,  and  reasonings  of  Advocate-General 
Desjardins.  See  also  an  article  of  Professor  Wahl,  Journal  des 
Societes,  1900,  p.  193  et  seq.) 

And  it  can  not  be  said  that  the  legislator  had  in  mind  in  the  said 
article  31  only  companies  whose  dissolution  before  the  lixed  time  was 
rendered  necessary  by  the  bad  condition  of  their  affairs.  This  would 
be  an  error.  It  is  the  solvent  companies  he  had  in  contemplation  in 
article  31  of  the  law  of  1867.  And  the  proof  of  this  is  in  article  37  of 
the  same  law,  which  provides  in  that  article  for  the  ease  in  which  a 
company  has  lost,  not  its  whole  capital,  but  only  three-fourths  of  its 
capital:  the  legislator  does  not  limit  himself  to  authorizing  the  gen- 
eral meeting  to  deliberate  on  the  question  of  anticipated  dissolution,  it 
prescribes  that  deliberation,  and  it  orders  that  it  shall  be  submitted  to 
a  general  meeting  to  which  all  the  stockholders  shall  be  admitted, 
and  which  will  validly  deliberate  if  only  the  fourth  part  of  the  stock- 
holders shall  be  represented  in  it. 

Thus  the  anticipated  dissolution  of  an  anonymous  company  is  pos- 
sible, even  where  the  b}T-laws  are  silent,  notwithstanding  article  1855. 
A  fortiori  is  it  possible,  beyond  any  manner  of  doubt,  where  the  by- 
laws themselves  have  expressly  provided  for  it  and  expressly  authorized 
it.    Such  is  the  case  for  the  New  Panama  Canal  Company. 

Article  60  of  the  by-laws,  reproducing  as  to  this,  article  31  of  the 
law  of  1867,  formally  gives  to  the  general  meeting,  constituted  in  the 
manner  specified  by  articles  61  and  62,  the  right  to  decide: 

"The  reduction  of  the  duration,  the  prolongation,  or  the  anticipated 
dissolution  of  the  company."  It  gives  it  that  right  without  qualifi- 
cation, without  condition.  And  as  the  agreement,  as  we  have  shown 
above,  is  the  law  of  the  parties,  this,  which  is  part  of  the  company 
agreement,  has  established  in  this  respect  the  power  of  the  company, 
giving  to  it,  as  we  see,  the  greatest  amplitude. 

The  general  meeting,  constituted  in  the  manner  prescribed  b}T  articles 
61  and  62,  can,  then,  dissolve  the  company  for  whatever  reason  seems 
to  it  good.  And  if  it  can  pronounce  that  dissolution  pure  and  simple, 
evidently  it  can  also  subject  it  to  whatever  condition,  to  whatever  con- 
tingency it  sees  fit;  it  can  vote  the  alienation  of  the  enterprise  which 
constitutes  the  company's  object  in  order  to  dissolve  the  company  in 
case  the  alienation  takes  place.  Its  will  is  sovereign.  On  one  hand, 
the  anticipated  dissolution,  like  every  dissolution,  carries  with  it 


PANAMA  CANAL  TITLE. 


55 


Inevitably  liquidation  and  the  realization  of  the  assets;  on  the  other 
hand,  article  03  of  the  by-laws  of  the  new  company  permits  the  general 
meeting,  in  case  of  dissolution,  to  confer  upon  its  Liquidator  or  liqui- 
dators the  most  extensive  powers. 

From  these  premises  we  conclude:  That  the  new  company  can 
indisputably  dissolve  itself  purely  and  simply,  conferring  upon  its 
liquidators  the  power  to  make  the  proposed  cession;  that  not  less 
indisputably  it  can  subject  its  dissolution  to  the  condition  of  the  making 
of  that  cession;  and  we  thus  arrive  at  the  conclusion  that  the  new  com- 
pany can,  notwithstanding  its  object  and  its  term  of  duration,  decide 
upon  the  projected  cession  to  the  United  States  of  America,  and  give 
to  its  council  of  administration  the  power  to  make  it,  deciding  ;it  the 
same  time  that  upon  its  being-  made  the  company  shall  be  ipso  facto 
dissolved.    Thus  disappears  the  first  objection. 

The  second  objection  taken  from  the  object  of  the  new  company, 
concerns  the  character  of  that  object. 

The  enterprise,  the  object  of  the  new  company,  having  a  national 
character,  can  not  be  ceded  without  the  consent  of  the  French  Gov- 
ernment. Such  is  the  objection.  It  rests,  as  we  have  seen  in  the 
explanations  given  in  the  first  chapter  of  this  paper,  upon  an  altogether 
erroneous  assumption. 

From  the  point  of  view  of  French  statutory  and  other  French  law 
the  Panama  Canal  enterprise  is  an  ordinary  industrial  enterprise, 
essentially  private,  absolutely  independent  of  the  public  authorities  of 
France,  who  have  never  intervened,  either  in  its  constitution  or  car- 
rying it  on. 

It  is  necessary,  besides,  to  beware  of  the  phrase  "national  work," 
which  does  not  convey  a  very  clear  idea  to  the  mind  and  which  has  no 
place  in  legal  language.  Without  doubt  one  can  say  that  a  wrork  is 
national  when  from  its  nature  or  its  size  it  may  be  of  importance  to 
the  whole  country,  may  increase  its  fame  with  that  of  its  citizens,  its 
influence,  or  its  material  prosperity.  But  these  statements  and  the 
legitimacy  of  the  expression  so  made  use  of  and  which  concerns  the 
moral  order  of  things,  or  mere  sentiment,  may  be  without  any  legal 
significance.  There  is  no  national  work  in  law  except  one  that  is  car- 
ried on  directly  by  the  nation  itself;  no  national  property  except  one 
which  belongs,  properly  speaking,  to  the  nation.  The  enterprises  of 
individuals — and  we  know  that  the  old  and  new  Panama  companies 
were  formed  without  any  intervention  of  the  State — are  private  things 
and  works.  The  fact  that  it  may  have  a  national  character  in  Colombia 
could  not  give  the  French  Government  a  right  which  does  not  arise 
from  its  own  law. 

The  objection  is,  in  fact,  based  on  an  abuse  of  the  word  "  national." 
How  can  a  wTork,  because  it  is  important  to  a  foreign  government, 
come  under  the  authority  of  another  government  from  the  simple  fact 
that  subjects  of  the  latter  carry  it  on?  There  exist  in  the  world  quite 
a  number  of  companies,  purely  private,  that  carry  on  in  divers  foreign 
countries  enterprises  of  public  or  national  concern  in  those  countries. 
Such  are,  for  example,  the  enterprises  of  railroads  constructed  by 
French  or  English  companies  in  South  America.  Such  companies 
have  never  been  anything  but  private  companies,  and  no  one  has  ever 
contested  the  right  they  have  often  made  use  of  to  alienate  their  enter- 
prises to  third  persons  whenever  the  concession  does  not  prohibit 
alienation. 


56 


PANAMA  CANAL  T1TLK. 


The  objection,  then,  has  not  any  serious  character,  cither  in  law  or 
in  fact;  it  rests  merely  upon  the  word  "national"  turned  away  from  its 
true  meaning.  It  has  often  been  said  in  France  that  the  Suez  Canal 
enterprise  is  a  national  enterprise.  The  company  which  carries  it  on 
is,  however,  a  private  company  absolutely  mistress  of  its  rights. 

Besides,  from  the  point  of  view  of  Colombia,  the  work  of  the  new 
company  is  not  a  national  work:  it  is  a  private  work,  which  is  recog- 
nized by  the  decrees  of  concession  to  he  a  private  enterprise,  capable 
of  being  sold  to  any  individual  or  company  (article  21,  law  of  May 
18,  1878).  of  being  ceded  by  one  company  to  another  (article  1.  law  of 
December  26,  1890),  and  with  regard  to  the  free  alienation  of  which 
only  one  reservation  is  made — the  case  of  a  sale  to  a  foreign  govern- 
ment (article  21.  law  of  May  18,  1878). 

The  new  company  has  no  political  character  or  obligation,  and  neither 
France  nor  Colombia  has  set  up  any  pretension  of  the  kind. 

We  are,  then,  through  with  the  objections  taken  from  the  object  of 
the  company,  and  come  now  to  those  drawn  from  the  rights  granted  to 
the  liquidation  of  the  Universal  Company  by  the  original  constitutive 
agreement. 

This  objection  may  be  thus  stated: 

By  the  terms  of  the  stipulations  made  in  its  original  company  agree- 
ment, the  new  company  accorded  to  the  Universal  Company  60  per 
cent  of  the  profits  of  operating  the  canal  in  return  for  its  contribution. 

This  60  per  cent  is  the  price  of  the  contribution. 

That  price  can  not  he  altered. 

But  it  would  be  an  alteration  to  sell  the  concession  and  properties 
that  go  with  it  for  a  fixed  sum. 
Then  the  sale  is  impossible. 
Such  is  the  objection. 
Let  us  see  what  it  i^  worth. 

We  remark  in  the  first  place  that  the  liquidator  could  foresee,  and  did 
foresee,  when  he  was  making  the  contribution  to  the  new  company  of 
the  properties  it  is  proposed  to  cede  to  the  Government  of  the  United 
States,  that  the  share  in  the  profits  of  the  operation  of  the  canal  which 
he  was  stipulating  for  as  compensation,  as  the  price  of  his  contribution, 
might  be  replaced,  in  future  contingencies,  by  another  compensation. 
In  giving  adhesion  to  the  by-laws  of  the  new  company,  in  which  he  is 
moreover  a  subscriber  to  shares  payable  in  money,  at:  the  same  time 
that  he  is  a  contributor  of  property  in  kind,  he  should  have  considered 
and  he  did  consider,  like  all  others  interested,  the  meaning  and  effect 
of  article  60  of  the  by-laws,  hereinbefore  analyzed;  he  was  acquainted, 
besides,  with  article  31  of  the  law  of  July  21.  1867,  which  binds  all 
persons.  He  has,  then,  accepted  in  advance  the  eventuality  of  an 
anticipated  dissolution  and,  therefore,  the  possibility  of  an  alienation 
of  the  enterprise,  rendering  impossible  for  the  future  the  carrying  out  of 
the  stipulation  which  gives  him  60  per  cent  of  the  benefits  of  operation. 
Yet  it  is  to  be  observed  that  the  liquidator  made  no  special  stipulation 
in  view  of  such  an  event;  he  did  not  require  for  himself  a  different 
treatment  from  that  of  all  others  concerned.  All  will  be  obliged 
to  content  themselves  with  some  other  benefit  than  that  of  receiving 
shares  of  the  annual  profits  and  proceeds,  if  any.  We  see.  then,  that 
from  this  first  point  of  view  the  objection  is  already  gotten  rid  of, 
especially  if  it  is  added,  in  view  of  the  texts  of  the  law,  that  it  is 
impossible  to  conceive  of  a  contract  contrived  in  such  a  way  that  the 


PANAMA  CANAL  TITLE. 


57 


parties  would  not  be  able  to  profit  by  favorable  events  in  the  future  or 
escape  future  perils,  under  the  pretense  that  these  events  were  not 
specifically  provided  for. 

We  repeat,  then,  that  the  liquidator,  having  given  adhesion  to 
article  60  of  the  by-laws,  liquidation  and  alienation  were  things  pro- 
vided for  between  the  parties,  and  therefore  the}'  are  in  no  sense 
impossible. 

We  shall  examine,  in  view  of  the  fait  accompli,  the  objection  stated. 
It  will  be  explained  away  quite  easily  if,  taking  the  hypothetical  case 
of  a  sale  pure  and  simple,  we  leave  out  of  view  the  particular  ease  of 
an  alienation  in  the  form  of  a  contribution  to  an  anonymous  company. 

It  is  incontestible  in  principle  that  a  vendee  can  not,  at  his  own  will, 
alter  what  he  has  engaged  himself  to  give  to  the  vendor  as  the  price 
of  the  thing  sold. 

But  it  is  not  less  so  that,  if  the  vendee  can  not  alone  alter  his  promise 
to  the  vendor,  such  an  alteration  can  be  agreed  upon  between  them 
without  the  rights  of  ownership  of  the  vendee  being  in  any  way 
changed. 

It  is  very  clear,  for  example,  that  if  I  buy  a  piece  of  immovable 
property,  agreeing  to  pay  an  annuity  to  the  vendor,  I  can  not.  by  my  own 
sole  power,  free  myself  by  turning  that  annuity  into  a  lump  sum;  but 
I  can  certainly  do  so  by  agreement  with  my  vendor  without  this  alter- 
ation of  the  price  first  stipulated  affecting  in  anyway  the  transmission 
of  ownership  which  takes  place  by  virtue  of  the  original  contract. 
(Article  1583  of  the  Civil  Code.) 

What  can  be  done  between  individuals,  physical  beings,  can  be  done 
likewise  between  moral  beings,  between  companies.  There  is  no  rea- 
son for  a  distinction  in  the  two  cases,  and  it  can  not  be  supposed  that 
companies  which  are  the  great  instruments  of  modern  activity  are  in 
a  situation  less  advantageous  than  individuals. 

But  what  is  in  fact  the  state  of  affairs  here? 

On  one  hand  the  new  company  has  undertaken  to  do  nothing  with- 
out the  agreement  and  consent  of  the  liquidator. 

On  the  other  hand,  the  liquidator,  the  subject  of  the  cession  having 
been  submitted  to  him  by  the  newr  company,  being  desirous  of  favor- 
ing negotiations  the  value  of  which  his  great  experience  and  his  knowl- 
edge of  the  interests  confided  to  him  enable  him  to  estimate,  wishing 
to  give  to  those  negotiations  a  support  the  more  effective  by  reason  of 
his  sharing  the  responsibility,  has  applied  to  the  tribunal  that  com- 
missioned him,  and  has  asked  of  it  to  have  settled  by  friendly  arbitra- 
tion the  questions  to  which  the  cession  might  give  rise  as  between  the 
liquidation  and  the  new  company,  and  especially  the  question  of  the 
division  of  the  price,  and  the  tribunal,  by  judgment  of  August  2,  1901, 
has  given  him  the  authority  thus  asked  for.  (See  the  text  of  the  said 
judgment;  brief  of  Sullivan  &  Cromwell;  exhibits,  pp.  253  et.  seq.) 

Under  these  circumstances  there  was  signed  on  the  21th  of  Decem- 
ber, 1901,  by  the  new  company  and  the  liquidator,  M.  Gautron,  a 
document  setting  forth  the  agreement  between  them.  (See  brief  of 
Messrs.  Sullivan  &  Cromwell;  exhibits,  p.  261.) 

By  the  terms  of  this  document  the  parties — 

Have  determined  (article  1)  that  "The  New  Panama  Canal  Company 
shall  be  alone  charged  with  carrying  on  the  negotiations  with  the  Gov- 
ernment of  the  United  States;"  that  it  "shall  have  all  powers  for 
ultimately  coming  to  terms  with  it,  and  for  settling  with  it  the  price 
and  the  conditions  of  the  cession." 


58 


PANAMA  CANAL  TITLE. 


And  they  constituted  (articles  2  to  4)  an  arbit  ral  ion  tribunal  to  decide 
the  question  to  be  settled  between  them,  the  question  of  the  division 
of  the  price. 

The  arbitration  tribunal  rendered  its  decision  on  the  ilth  of  Febru- 
ary, 1902.  (See  brief  of  Sullivan  &  Cromwell;  exhibits,  supplement, 
p.271.) 

Thus,  and  pausing-  here  in  the  account  of  what  was  done,  the  agree- 
ment by  the  liquidator  to  the  alteration  which  the  sale  will  make  in 
what  is  due  him  is  clear  and  indisputable. 

If  there  is  an  alteration  in  what  was  settled  by  the  original  agree- 
ments, this  alteration  made  by  agreement  is  undoubtedly  valid  and 
lawful. 

The  matter  all  comes,  indeed,  to  a  question  of  the  power  of  the 
liquidator,  and  after  the  examination  of  it  already  herein  made  that 
power  is  no  longer  doubtful,  provided  only  the  special  formalities  are 
followed  which  arise  from  his  character  as  liquidator  and  from  the 
special  law  which  governs  him. 

In  the  beginning  he  would  have  had  the  right,  beyond  a  doubt,  to 
alienate  the  properties  and  rights  of  the  liquidation  for  a  fixed  sum  in 
money;  thinking  to  do  better,  he  stipulated  for  a  share  of  the  profits. 

Later,  he  believes  it  advantageous  to  sell  that  share  of  the  profits, 
to  convert  it  into  cash;  why  has  he  not  the  right  to  do  so.  provided  he 
conforms  in  that  alienation  to  the  character  with  which  he  is  invested? 

And  why,  if  he  can  do  that  with  a  third  party,  can  not  he  do  it  with 
his  vendee,  and  give  up  for  a  fixed  sum  a  part  of  the  profits  which  he 
quite  reasonably  looks  for? 

How  can  it  be  maintained  that,  because  in  the  beginning  lie  thought 
it  advantageous  to  stipulate  for  a  certain  price  in  exchange  for  his 
contribution,  he  can  not,  circumstances  changing,  alter  also,  in  agree- 
ment with  his  vendee,  the  price  agreed  upon? 

In  every  country  of  the  world,  he  who  has  the  right  to  cede  a  thing, 
to  stipulate  accordingly  the  price  of  that  cession,  has  equally  the  right 
to  alter  that  price  if  the  other  party  consents  thereto. 

Is  it  necessary  to  dwell  longer  upon  this? 

We  believe  not. 

And  we  hold  as  certain  that  the  liquidator  of  the  Universal  Company 
can  give  a  valid  assent  to  the  modification  or  transformation  of  the 
rights  arising  in  favor  of  the  liquidation  from  the  contribution  he 
made  in  its  behalf,  provided  he  gives  it  in  accordance  with  the  formal- 
ities that  were  requisite  for  the  validity  of  that  contribution,  the  for- 
malities, in  a  word,  required  to  validate  his  acts  of  alienation. 

The  question,  the  only  question  that  can  be  made,  is,  then,  as  to  the 
observance  of  the  requirements  of  the  law  of  July  1,  1893. 

And  these  formalities  have  been  observed. 

The  liquidator,  M.  Gautron,  gave  the  civil  tribunal  of  the  Seine 
possession,  according  to  the  provisions  of  article  10  of  the  law  of 
July  1, 1893,  of  a  request  for  approval  of  the  award  of  the  arbitrators, 
and  of  the  assent  he  gave  to  the  modification  to  be  made  in  the  con- 
tract of  contribution  entered  into  in  1891  between  the  liquidator  and 
the  new  company  in  order  to  allow  the  cession  to  the  United  States. 

Within  the  month  from  the  publication  of  the  said  judgment  in  the 
Official  Journal,  and  the  Official  Journal  (commune  edition)  in  con- 
formity with  article  11  of  the  law  of  July  1, 1893,  a  publication  throw- 
ing open  for  a  month,  for  a  month  onl}T,  according  to  the  same  article 


PANAMA  CANAL  TITLE. 


59 


the  opportunity  for  tierce  opposition  to  the  stockholders,  to  the  man- 
dataire  of  the  bondholders,  and  to  the  company's  creditors  other  than 
bondholders;  that  is  to  say,  to  all  interested  and  to  the  only  ones  who 
could  possibly  be  interested,  one  tierce  opposition  was  interposed,  only 
one. 

The  civil  tribunal  of  the  Seine  was  put  in  possession  of  that  tierce 
opposition,  and  at  the  same  time  of  a  prohibition  served  upon  the 
new  company  by  the  tiers  opposant  and  notified  by  him  to  the  Gov- 
ernment of  the  United  States  of  America. 

By  judgment  of  July  3,  1902,  the  tribunal  rejected  the  tierce  oppo- 
sition on  the  ground  of  its  inadmissibility  based  upon  the  tiers  oppo- 
sant's  character  as  a  bondholder,  the  law  of  July  1,  1893,  not  giving 
to  bondholders  the  individual  right  to  make  the  tierce  opposition 
provided  for  by  its  article  11,  a  ground  of  inadmissibility  of  public 
order,  which  was  obligatory  upon  the  tribunal  to  take  notice  of  and 
enforce  even  if  the  liquidator  had  not  made  the  point. 

Let  us  observe,  also,  that  in  the  discussions,  with  an  enlightened 
care  for  the  well-understood  interests  of  which  he  had  charge,  the 
mandatairc  of  the  bondholders,  M.  Lemarquis,  intervened,  in  order  to 
declare  emphatically  that  he  was  fully  in  accord  with  the  liquidator 
and  that  it  was  deliberately  and  intentionally  that  he  had  omitted  to 
make  use  of  the  right  of  tierce  opposition  that  he  alone  had  on  behalf 
of  the  mass  of  bondholders.  Let  us  also  make  a  note  of  the  fact  that 
by  the  same  judgment,  the  tribunal,  upon  the  request  of  the  new 
company,  threw  out  the  prohibition  served  by  the  tiers  opposants, 
the  two  proceedings  having  been  united. 

Finally,  getting  jurisdiction  in  its  turn,  the  court  of  appeals  of 
Paris,  by  decree  of  August  5,  1902,  confirmed  in  all  respects  the 
judgment  of  July  3,  1902. 

The  approval  given  on  the  19th  of  March,  1902,  to  the  agreements 
made  has,  accordingly,  become  definitive. 

Consequently,  no  one  isv  able  to-day  and  no  one  will  be  able  to 
criticise  or  put  in  doubt  those  agreements.  The  law  of  July  1,  1893, 
the  expiration  of  the  time  allowed  to  enter  objections  as  authorized 
by  it,  the  force  of  res  adjudicata,  absolutely  prevent  anything  of  the 
kind. 

And  these  agreements  formally  recognize  in  the  new  company  the 
power  to  negotiate  and  to  conclude  alone  with  the  Government  of  the 
United  States  of  America  the  cession  in  question. 

Who,  then,  can  reasonably  doubt  that  it  can  validly  do  so? 

CONCLUSIONS. 

We  have  established  that  the  New  Panama  Canal  Company  was  regu- 
larly constituted;  that  it  is  entirely  distinct  from  the  Universal  Com- 
pany of  the  Interoceanic  Canal  of  Panama,  at  present  dissolved  and 
in  liquidation;  that  a  dissolved  company,  with  us,  continues  to  exist 
for  the  requirements  of  its  liquidation,  but  only  for  those  require- 
ments, that  it  is  dead  in  all  other  respects,  and  can  not  reorganize 
itself  in  the  English  or  American  sense  of  the  word— and  we  have  thus 
responded  to  the  third  question. 

We  have  established  also  that  the  New  Panama  Canal  Company  and 
the  Universal  Company  of  the  Interoceanic  Canal  of  Panama,  the  one 
a  commercial  company,  the  other  a  civil  company,  are  both  essentially 


60 


PANAMA  CANAL  TITLE. 


private  companies,  not  having  in  any  degree  in  France  a  national 
character — and  thus  is  answered  the  fifth  question. 
We  have  then  established: 

1.  The  regularity  and  irrevocable  nature  of  the  contribution  made 
by  the  liquidator  of  the  Universal  Company  to  the  new  company  and 
definitively  approved  by  the  civil  tribunal  of  the  Seine  according  to  the 
provisions  of  the  law  of  July  1,  1893,  showing  that  in  France  no  juris- 
diction can  weaken  the  binding  force  of  a  law  regularly  promulgated 
(question  No.  8). 

2.  That  by  this  contribution  the  new  company  became  from  the 
moment  of  its  organization  the  exclusive  owner  of  the  concession,  of 
the  works  of  the  canal,  and  of  all  the  other  properties  it  is  proposed 
to  cede  to  the  Government  of  the  United  States.  That  this  ownership 
is,  in  its  hands,  absolute,  that  it  carries  with  it  the  effects  set  forth  in 
article  544  of  the  Civil  Code;  that  it  is  not  burdened  with  any  charge 
other  than  that  stipulated  in  the  contract  of  contribution;  that  is  to  say, 
to  pay  either  the  price  agreed  upon  or  that  which  may  be  regularly 
substituted. 

3.  That  neither  the  new  company,  nor  the  property  contributed  to  it, 
is  bound  in  the  way  of  either  personal  or  real  indebtedness  in  favor  of 
the  liquidation,  by  any  charge  other  than  the  above  mentioned;  that, 
especially,  no  debts  or  charges  of  the  Universal  Company  in  favor  of 
bondholders,  stockholders,  or  any  other  creditors  weigh  upon  it. 

4.  That  the  rights  granted  b}T  the  New  Panama  Canal  Company  to 
the  liquidation  of  the  Universal  Company,  in  return  for  the  contribu- 
tion received  from  it,  do  not  paralyze,  in  its  hands,  the  right  of  free 
disposal  which  is  the  natural  incident  of  the  right  of  ownership. 

We  have  shown,  further  and  superabundantly,  as  to  this  last  point: 

(a)  That  by  the  provisions  of  the  agreements  entered  into  between  it 
and  the  liquidator  of  the  Universal  Company,  acting  in  the  plenitude  of 
its  rights,  the  new  company  has  become,  in  all  respects,  alone  charged 
with  negotiating,  with  coming  to  an  agreement,  with  closing  with  the 
Government  of  the  United  States,  without,  moreover,  these  arrange- 
ments having  invalidated  or  altered  in  any  wTay  its  original  ownership. 

(b)  That  the  document  setting  forth  these  agreements,  and  also  the 
full  and  entire  assent  of  the  liquidator  of  the  Universal  Company  to 
the  proposed  cession  and  the  modification  of  the  price  of  his  contribu- 
tion, has  received,  in  accordance  with  the  provisions  of  articles  10 
and  11  of  the  law  of  July  1,  1893,  a  definitive  approval. 

From  this  we  derive  with  absolute  certainty  answers  to  questions 
1,  2,  4,  6,  and  7: 

That  the  New  Panama  Canal  Company  acquired,  on  the  day  of  its 
organization,  an  absolute  and  certain  title  to  the  concessions,  to  the 
works  of  the  canal,  and  to  all  the  other  properties  which  it  is  proposed 
to  cede  to  the  United  States  (question  1); 

That  that  title  of  ownership  was  not  invalidated  or  altered  by  the 
agreements  of  December,  1901,  entered  into  between  the  new  company 
and  the  liquidator  of  the  Universal  Company,  acting  in  the  plenitude 
of  his  rights  and  under  the  definitive  sanction  of  the  civil  tribunal  of 
the  Seine,  according  to  the  provisions  of  the  law  of  July  1,  1893 
(question  6); 

That  the  New  Panama  Canal  Company  has  the  power  to  proceed  by 
itself  alone  to  make  the  proposed  cession  (question  2); 

That  by  this  cession  the  United  States  will  obtain  the  full  and  entire 
ownership  of  the  properties  ceded; 


PANAMA  CANAL  TITLE. 


61 


That  this  ownership  will  be  transmitted  to  them  free  and  clear  of  all 
the  personal  debts  and  charges  of  the  Universal  Company  of  the  Inter- 
oceanic  Canal,  and  especially  of  all  the  bonded  indebtedness  of  the  said 
company  and  of  the  obligation  imposed  upon  it  by  tin4  law  of  June  8, 
1888,  debts  and  charges  which  do  not  directly  affect  properties,  but 
the  person,  and  consequently  not  on  one  hand  following  the  proper- 
ties when  alienated  and  when  contributed  to  the  new  company,  nor  on 
the  other  hand  being  imposed  upon  the  latter  as  a  condition  of  that 
contribution,  and  therefore  not  resting  in  any  way  upon  the  new  com- 
pany personally  or  upon  its  properties  (questions  4  and  7); 

We  have  shown  finally,  having  in  view  a  special  objection  belong- 
ing- to  the  third  question,  that  the  fact  that  the  proposed  cession  will 
put  an  end  to  the  company's  object  and  carry  with  it,  from  the  nature 
of  things,  the  dissolution  of  the  new  company,  can  not  paralyze  the 
right  of  disposal  of  the  new  company,  this  company  having  from  the 
law  and  its  by-laws  the  right  to  dissolve  itself  by  anticipation. 

And  wre  conclude,  formally,  in  affirming  the  absolute  regularity  of 
the  cession  when  made  by  the  council  of  administration  of  the  New 
Panama  Canal  Company  (or,  say,  by  its  members,  specially  delegated 
to  that  effect),  and  ratified  by  extraordinary  general  meeting,  which 
meeting  should,  moreover,  the  cession  having  become  definitive  and 
the  company's  object  at  an  end,  pronounce  the  dissolution  of  the  com- 
pany and  name  some  liquidators  intrusted  with  receiving  and  distribu- 
ting the  price  of  the  cession  thus  sovereignly  agreed  to  by  the  company. 

Deliberated  at  Paris  the  1st  of  September,  1902. 

(Signed.)  Leon  Devin, 

Former  JBatonnier. 
H.  Du  Buit, 

Former  Batonnier. 

LlMBOURG, 

Henri  Thieblin, 
Paul  Gontard. 

We,  the  undersigned  general  counsel  in  America  of  the  New  Panama 
Canal  Company,  having  participated  in  the  conferences  and  studies 
leading  to  the  foregoing  opinion,  do  hereby  express  our  full  concur- 
rence therein. 

Dated  Paris,  September  1,  1902. 

Sullivan  &  Cromwell, 

General  Counsel. 


EXHIBIT  3. 

LAWS  OF  1867  AND  1893  CONCERNING  COMPANIES. 
A  LAW  concerning  companies,  enacted  on  the  24th  day  of  July,  1867. 
COMPANIES  OF  COMMANDITE  PAR  ACTIONS. 

(Art.  1  providing  that,  before  being  definitely  constituted,  the  whole 
stock  must  be  subscribed  and  a  part  paid  in,  etc. ;  modified  by  the  law 
of  August  1,  1803.) 

Art.  2.  The  shares  or  coupons  of  shares  are  negotiable  after  the 
payment  of  one-quarter. 

(Art.  3,  making  the  original  subscribers  and  transferees  responsible 
for  the  balance  when  shares  sold  before  one-half  paid  in;  modified  by 
the  law  of  August  1,  1893.) 


62  PANAMA  CANAL  TITLE. 

Art.  4.  When  an  associate  makes  a  contribution  which  docs  not 
consist  in  money,  or  stipulates  for  his  benefit  special  advantages,  the 
first  general  meeting  appraises  the  value  of  the  contribution  or  ground 
for  the  stipulated  advantages.  The  association  is  not  definitely  con- 
stituted except  after  the  approval  of  the  contribution  or  of  the  advan- 
tages given,  by  another  general  meeting  after  a  new  call  for  one. 
The  second  general  meeting  can  not  pronounce  the  approval  of  the 
contribution  or  of  the  advantages,  except  after  a  report,  which  shall 
be  printed  iind  held  at  the  disposal  of  the  shareholders  five  day,;  at 
least  before  that  meeting.  The  votes  are  taken  by  a  majority  of  the 
shareholders  present.  The  majority  must  include  a  quarter  of  the 
shaieholders  and  represent  a  fourth  of  the  company's  money  capital. 
The  associates  who  have  made  the  contribution  or  stipulated  for  the 
advantages  aforesaid  can  not  vote  at  such  meeting.  On  failure  of 
approval  the  association  remains  without  effect  with  regard  to  all  the 
parties.  The  approval  constitutes  no  obstacle  to  a  suit  based  upon 
fraud  or  wrongdoing.  The  provisions  of  the  present  article  concern- 
ing the  verification  of  the  contribution,  which  does  not  consist  in 
money,  are  inapplicable  to  the  case  in  which  the  company  to  which 
the  contribution  is  made  is  formed  among  those  only  who  are  the 

owners  of  the  contribution  in  undivided  shares. 

*  *  *  *  *  *  * 

Art.  17.  The  shareholders,  representing  the  twentieth,  at  least,  of 
the  company  capital,  can,  in  their  common  interest,  authorize  at  their 
expense  one  or  several  mandataires  or  agents  to  sustain,  as  plaintiff  or 
defendant,  an  action  against  the  managers  or  against  the  members  of 
the  council  of  surveillance,  and  to  represent  them  in  that  case  in  court 
without  prejudice  to  the  individual  right  of  action  of  each  of  the 
shareholders. 

*  *  *  *  *  *  * 

II.   ANONYMOUS  COMPANIES. 

Art.  21.  In  future,  anonymous  associations  may  be  formed  without 
authorization  from  the  Government. 

Whatever  be  the  number  of  associates  or  members,  such  companies 
henceforth  ma}r  be  formed  by  document  drawn  up  without  notarial 
aid,  and  made  in  duplicate. 

They  will  be  governed  by  the  provisions  of  articles  29,  30,  32,  33, 
34,  and  36  of  the  Code  of  Commerce  (these  articles  are  not  restrictive 
but  concern  the  naming  of  the  company,  the  division  of  the  capital 
into  shares,  the  limitation  of  responsibility  to  the  amount  of  the  capi- 
tal, and  the  like),  and  by  those  set  forth  under  the  present  heading. 

Art.  22.  Anonymous  companies  are  directed  or  managed  by  one  or 
more  attorneys  or  mandataries  delegated  for  the  purpose  for  a  specified 
period  of  time,  and  whose  powers  are  revocable;  they  may  or  may 
not  receive  a  salary,  but  are  chosen  from  among  the  associates  of  the 
company. 

These  attorneys  or  representatives  may,  in  turn,  select  a  manager 
from  their  own  number,  or,  if  the  associations^  b}rdaws  permit, 
they  may  delegate  their  own  powers  to  an  attorney  unconnected  with 
the  company,  but  for  whose  acts  they  remain  responsible  to  the  said 
company. 

Art.  23.  The  company  can  not  be  formed  if  the  number  of  members 
or  associates  is  below  seven. 


PANAMA  CANAL  TITLE. 


63 


Art.  24-.  The  provisions  of  articles  L,  2,  3,  and  4  of  the  present  act 
are  applicable  to  anonymous  companies. 

In  the  case  of  anonymous  companies,  the  declaration  or  statement 
required  of  the  manager  by  article  1  must  be  made  by  the  founders 
of  the  concern.  This  declaration  or  statement  is  submitted,  together 
with  the  documents  in  support  of  it,  to  the  first  general  meeting, 
which  ascertains  its  genuineness. 

Art.  25.  In  any  case,  a  general  meeting  is  to  be  called,  by  care  of 
the  promoters  of  the  company,  subsequently  to  the  establishment  of 
the  subscription  of  the  capital  stock  and  of  the  payment  of  one-fourth 
of  the  money  capital.  This  meeting  appoints  the  first  administrators; 
it  appoints  likewise,  for  the  first  year,  the  commissaires  or  supervisors 
provided  for  by  article  32  hereinbelow. 

These  administrators  can  not  be  appointed  for  more  than  six  years; 
they  may  be  reelected,  save  where  the  by-laws  stipulate  to  the  contrary. 

They  may  be  named  or  designated  by  the  by-laws,  with  an  express 
provision  that  their  appointment  shall  not  be  submitted  to  the  general 
meeting  for  approval.  In  this  case  they  can  not  be  named  for  more 
than  three  years. 

The  minutes  of  the  meeting  note  the  acceptance  of  the  administrators 
and  commissaires  or  supervisors  present  at  the  meeting. 

The  due  formation  and  establishment  of  the  company  dates  from 
this  acceptance  aforesaid. 

Art.  26.  The  administrators  must  own  a  certain  number  of  shares, 
to  be  determined  by  the  by-laws  of  the  company. 

These  shares  are  answerable  as  a  whole  as  a  guarantee  for  all  the 
acts  of  the  management,  oven  for  the  exclusively  personal  acts  of  one 
of  the  administrators. 

They  are  in  the  name  of  the  holders  (not  to  bearer),  untransferable, 
and  bear  a  stamped  indication  of  their  nontransferability,  and  are 
deposited  in  the  company  treasury. 

Art.  27.  A  general  meeting  is  held,  at  least  once  a  year,  at  the  time 
appointed  by  the  by-laws.  The  by-laws  determine  the  number  of 
shares  wrhich  one  must  hold,  either  as  owner  or  as  attorney,  in  order 
to  obtain  admission  to  the  meeting;  also  the  number  of  votes  falling  to 
each  shareholder  in  consideration  of  the  numl  er  ol'  shares  held  by  him. 

However,  in  those  general  meetings  which  are  called  for  the  purpose 
of  verifying  contributions,  of  naming  the  first  administrators,  and  of 
ascertaining  the  genuineness  of  the  declaration  or  statement  made  by 
the  founders  of  the  company  in  accordance  with  the  second  paragraph 
of  article  21  hereof,  every  shareholder  may,  regardless  of  the  number 
of  shares  held  by  him,  take  part  in  the  deliberations  and  cast  the 
number  of  votes  determined  by  the  by-laws;  provided,  however,  the 
said  number  of  votes  does  not  exceed  ten. 

Art.  28.  In  all  general  meetings  a  majority  of  votes  shall  cany.  A 
roll-call  sheet  is  kept,  to  be  signed  by  all  members  present.  It  bears 
the  names  and  residences  of  the  shareholders,  as*  well  as  the  number 
of  shares  held  by  each  one  of  them. 

This  list  is  certified  to  by  the  presiding  board  of  the  meeting,  and 
is  deposited  at  the  main  office  of  the  company.  It  must  be  shown  to 
anyone  applying  to  see  it. 

Art.  29.  General  meetings  called  for  other  purposes  than  those  set 
forth  in  the  two  articles  following  must  be  attended  by  a  number  of 
shareholders  representing  at  least  one-fourth  of  the  capital  stock. 


64 


PANAMA  CANAL  TITLE. 


Should  the  general  meeting  not  receive  this  attendance,  a  new  meet- 
ing is  called  according  to  the  forms  and  within  the  space  of  time  pre- 
scribed by  the  by-laws.  The  deliberations  and  acts  of  this  new  meet- 
ing will  be  valid,  whatever  may  have  been  the  proportion  of  capital 
stock  therein  represented  by  the  shareholders  present. 

Art.  30.  Meetings  called  to  deliberate  on  the  verifying  of  contribu- 
tions, on  the  appointment  of  the  first  administrators,  on  the  genuine- 
ness of  the  declaration  or  statement  made  by  the  founders,  as  required 
by  paragraph  2  of  article  24  hereof,  must  be  attended  by  a  number  of 
shareholders  representing  at  least  one-half  of  the  capital  stock. 

In  computing  the  capital  stock,  one-half  of  which  must  be  repre- 
sented at  a  meeting  for  verifying  a  contribution,  contributions  which 
are  free  from  this  verifying  requirement  are  alone  to  be  taken  into 
account. 

Should  the  general  meeting  represent  less  in  its  attendance  than  one- 
half  of  the  capital  stock,  it  can  take  only  a  temporary  decision.  In 
this  case,  a  new  general  meeting  is  called. 

The  temporary  decisions  taken  by  the  first  meeting  are  made  known 
to  the  shareholders  by  publication  at  two  distinct  times,  at  an  interval 
of  eight  days  from  each  other,  one  month  at  least  in  advance  of  the 
new  meeting,  said  publication  to  be  made  in  some  newspaper  desig- 
nated to  receive  legal  notices.  The  decisions  in  question  become  final 
when  they  are  confirmed  by  the  new  meeting,  provided  the  attendance 
at  said  meeting  represents  one-fifth  at  least  of  the  capital  stock. 

Art.  31.  Meetings  having  to  deliberate  on  amendments  to  the 
by-laws,  or  on  motion  to  prolong  the  existence  of  the  company  beyond 
the  time  agreed  on,  or  to  dissolve  said  company  before  the  date  ap- 
pointed for  such  dissolution,  are  deemed  to  be  regularly  and  duly  held, 
and  their  decisions  are  considered  valid  only  when  the  attendance  at 
such  meetings  represents  at  least  one-half  of  the  capital  stock. 

Art.  32.  The  annual  general  meeting  appoints  one  or  more  commis- 
saires,  whether  members  or  not  of  the  company,  whose  duty  it  will 
be  to  present  to  the  general  meeting  of  the  following  year  a  report  on 
the  situation  and  condition  of  the  society  or  company,  on  the  balance 
sheet,  and  on  the  accounts  presented  by  the  administrators. 

The  approval  of  the  balance  sheet  and  of  the  accounts  aforesaid  is 
null  and  void  if  it  has  not  been  preceded  by  this  report  of  the  said 
commissaires  or  supervisors. 

In  case  the  general  meeting  has  failed  to  name  the  commissaires 
or  supervisors  aforesaid,  or  in  case  one  or  more  of  the  said  officials  be 
prevented  or  refuses  to  serve,  their  appointment  or  substitution  is 
effected  by  an  order  of  the  president  of  the  tribunal  of  commerce 
sitting  at  the  legal  residence  of  the  company,  on  the  request  of  any 
party  interested,  and  after  due  summoning  of  the  administrators. 

Art.  33.  During  the  three  months  next  preceding  the  date  set  by 
the  by-laws  for  the  holding  of  the  general  meeting  the  commissaires 
or  supervisors  have  the  power  and  authority  to  look  over  the  books 
and  to  examine  into  the  operations  and  workings  of  the  company  as 
often  as  they  may  deem  it  expedient  for  the  good  of  the  concern. 

They  may  at  any  time  in  urgent  cases  summon  a  general  meeting. 

Art.  34.  Every  anonymous  company  must  draw  up,"  once  in  six 
months,  a  summary  of  its  debit  and  credit  accounts. 

This  summary  is  kept  at  the  disposal  of  the  commissaires  or  super- 
visors. 


PANAMA  CANAL.  TITLE. 


65 


Moreover,  an  inventory  is  drawn  up  every  year,  as  required  by 
article  9  of  the  code  of  commerce,  giving  a  statement  of  the  personal 
and  real  property  of  the  company,  besides  a  reporl  of  all  debts  due  to 
and  by  the  company. 

Hie  inventory,  the  balance  sheet,  and  the  profit  and  loss  accounts 
are  placed  at  the  disposal  of  the  commissaires  at  least  forty  days 
before  the  general  meeting.    They  are  presented  to  (his  meeting. 

Art.  35.  At  least  fifteen  days  before  the  general  meeting  is  held 
every  shareholder  may  view  the  inventory  and  the  list  of  shareholders 
at  the  main  office  of  the  company,  and  may  require  a  copy  of  the 
balance  sheet  summing  up  the  inventory,  as  well  as  a  copy  of  the  com- 
missaires' report. 

Art.  36.  Every  year  an  assessment  of  one-twentieth  at  least  is  made 
and  levied  on  the  net  profits  for  the  purpose  of  forming  a  reserve 
fund. 

This  assessment  will  cease  to  be  obligatory  whenever  the  reserve 
fund  shall  have  reached  a  sum  equal  to  one-tenth  of  the  capital  stock. 

Art.  37.  In  case  the  company  should  have  sustained  the  loss  of 
three-fourths  of  its  capital  stock,  the  administrators  must  call  a  general 
meeting  of  all  the  shareholders  for  the  purpose  of  considering  the 
advisability  of  dissolving  the  company. 

Whatever  may  be  the  decision  taken  by  the  company  it  is  announced 
by  publication. 

Should  the  administrators  fail  to  call  the  general  meeting  aforesaid, 
or  in  a  case  where  the  said  meeting  can  not  be  brought  together  in  a 
regular  manner,  any  party  interested  may  petition  the  tribunals  for  a 
dissolution  of  the  compan}r. 

Art.  38.  Dissolution  may  be  decreed  on  the  request  of  any  inter- 
ested party  where  for  more  than  a  year  the  number  of  members  has 
been  less  than  seven. 

Art,.  39.  Article  17  is  applicable  to  anonymous  companies. 

Art.  40.  Unless  they  be  authorized  by  the  general  meeting,  the 
administrators  are  prohibited  from  either  taking  or  preserving  an 
interest,  whether  direct  or  indirect,  in  an  undertaking  or  in  a  contract 
made  with  the  company  or  in  its  behalf. 

Every  year  a  report  is  presented  to  the  general  meeting  rendering 
special  account  of  the  manner  in  which  enterprises  or  contracts 
authorized  by  it,  in  accordance  with  the  terms  of  the  preceding  para- 
graph, have  been  carried  out  or  executed. 

Art.  41.  Any  anonymous  company,  in  the  formation  of  which  due 
observance  has  not  been  had  of  the  requirements  set  forth  by  articles 
22,  23,  24,  and  25  herein  above,  is  null  and  void  with  regard  to  the 
interested  parties. 

Art.  42.  When,  in  accordance  with  the  terms  of  the  preceding 
article,  the  company  or  its  acts  and  deliberations  have  been  annulled, 
the  founders  who  were  the  cause  of  the  nullity  and  the  administrators 
who  were  in  office  when  the  nullity  was  incurred  are  jointly  responsi- 
ble to  third  parties,  without  prejudice  to  the  rights  of  shareholders. 

The  same  joint  responsibility  may  be  decreed  against  those  members 
whose  contributions  or  special  advantages  have  not  been  verified  and 
approved,  as  prescribed  by  article  24,  and  in  compliance  therewith. 

Art.  43.  The  extent  and  effects  of  the  commissaires'  responsibility 
to  the  company  depend  on  the  terms  of  the  instrument  appointing 
them. 


8751—02  5 


66 


PANAMA  CANAL  TITLE. 


Art.  44.  The  administrators  are  responsible  in  accordance  with  law, 
individually  or  jointly,  as  the  case  may  be,  to  the  company  or  to  third 
parties,  for  breach  of  the  provisions  of  the  present  act,  and  for  faults 
committed  by  them  in  their  management,  such,  for  instance,  as  the 
distributing  or  allowing  the  distribution  of  fictitious  dividends,  with- 
out opposing  the  same. 

Art.  45.  So  far  as  they  concern  anonymous  companies,  the  provi- 
sions of  articles  13,  14,  15,  and  16  of  the  present  act  apply  without  dis- 
tinction to  those  companies  which  are  actually  in  existence  and  to  such 
as  will  be  formed  under  the  said  present  act.  Such  administrators  as 
may  have  brought  about  fictitious  dividends  in  the  absence  of  an  inven- 
tory, or  by  means  of  false  inventories,  will  suffer  the  penalty  provided 
for  such  cases  by  No.  3  of  article  15  against  the  managers  of  mixed 
joint  stock  companies.  [Articles  L3,  14.  15,  and  16  provided  penalties 
merely,  especially  for  violations  of  articles  1.  '2.  and  3,  and  frauds  in 
connection  with  subscriptions,  payments,  etc.] 

The  provisions  of  the  last  three  paragraphs  of  article  10  are  likewise 
applicable  in  so  far  as  they  concern  anonymous  companies.  [Article 
10  provides  for  a  council  of  surveillance  to  report  irregularities,  etc.] 

Art.  4*>.  Anonymous  companies  now  existing  shall  continue,  so  long 
as  they  endure,  to  be  governed  by  the  provisions  to  which  they  are 
subject. 

On  obtaining  the  authorization  of  the  Government,  and  observing 
the  forms  prescribed  for  the  modification  of  their  by-laws,  they  may 
transform  themselves  into  anonymous  companies  within  the  terms  of 
the  present  act. 

Art.  47.  Companies  having  a  limited  liability  may  transform  them- 
selves into  anonymous  companies  within  the  terms  of  the  present  act 
by  observing  the  conditions  stipulated  for  the  modification  of  their 
by-laws. 

Articles  31.  37,  and  4<>  of  the  code  of  commerce,  and  the  law  of 
May  23,  1S63,  concerning  companies  with  limited  responsibility,  are 
hereby  repealed. 

in.   SPECIAL  REGULATIONS  FOR  COMPANIES  WITH  VARIABLE  CAPITAL. 

Art.  48.  The  by-laws  of  any  company  may  provide  for  an  increase 
of  the  capital  stock,  either  by  successive  payments  made  by  the  mem- 
bers or  by  the  admission  of  new  members,  and  for  a  decrease  of  the 
capital  stock  by  a  withdrawal,  either  total  or  partial,  of  the  contribu- 
tions made. 

Companies  whose  by-laws  shall  contain  the  said  provisions  shall  be 
governed,  in  addition  to  the  general  regulations  governing  them  in 
view  of  their  nature,  by  the  provisions  of  the  following  articles: 

Art.  49.  The  by-laws  governing  the  company  shall  not  provide  for 
a  capital  stock  in  excess  of  the  sum  of  two  hundred  thousand  francs. 

This  may  be  increased  from  year  to  year  by  the  general  meeting, 
though  no  one  increase  thus  decided  upon  shall  exceed  the  sum  of  two 
hundred  thousand  francs. 

Art.  50.  The  shares  or  fractions  of  shares  shall  be  in  the  name  of 
the  holder  (not  to  bearer),  even  after  they  may  have  been  fully  paid. 

They  shall  be  negotiable  only  after  the  final  formation  of  the 
company. 

Such  negotiation  can  be  effected  only  by  a  transfer  on  the  books  of 
the  company,  and  the  by-laws  may  vest  either  in  the  council  of  admin* 


PANAMA  CANAL  TITLE. 


67 


istration  or  in  the  general  meeting  the  power  of  opposing  such  transfer. 
(See  law  of  August  1,  1893,  article  6.) 

Art.  51.  The  by-laws  shall  fix  a  sum  or  amount  below  which  it  shall 
be  unlawful  to  reduce  the  capital  stock  by  withdrawal  of  contributions 
as  provided  by  article  48. 

This  sum  or  amount  shall  not  be  less  than  equal  to  one-tenth  of  the 
capital  stock. 

The  company  shall  be  deemed  finally  formed  and  constituted  only 
after  the  payment  of  one-tenth  at  least  of  the  capital  stock. 

Art.  52.  Any  associate  may  withdraw  from  the  company  when  he 
sees  tit,  save  where  there  is  an  agreement  to  the  contrary  and  save 
where  this  would  entail  a  breach  of  paragraph  first  of  the  preceding 
article. 

It  may  be  stipulated  that  the  general  meeting  shall  have  power  to 
decide,  by  the  majority  required  for  a  modification  of  the  by-laws, 
upon  the  striking  off  from  the  list  of  members  or  associates  one  or 
more  of  the  names  thereon. 

An  associate  who  ceases  to  belong  to  the  company,  whether  of  his 
own  accord  or  as  the  result  of  the  decision  of  the  general  meeting, 
shall  remain  responsible  to  the  associates  and  to  third  parties  for  all 
the  obligations  existing  at  the  time  of  his  withdrawal,  during  a  period 
of  live  years  occurring  next  after  said  withdrawal. 

Art.  53.  Whatever  be  the  form  of  the  company,  its  administrators 
shall  be  the  proper  parties  to  represent  it  before  the  courts. 

Art.  54.  The  company  shall  suffer  no  dissolution  on  account  of  the 
death,  retirement,  interdiction,  bankruptcy,  or  failure  (deeoniiture)  of 
one  of  the  associates;  it  will  continue  in  full  force  between,  and  as 
to,  the  other  associates. 

IV.    RULES  TOUCHING  THE  PUBLICATION  OF   ARTICLES  OF  AGREEMENT. 

Art.  55.  Within  the  space  of  one  month  from  the  formation  of  any 
commercial  company  or  association,  there  shall  be  deposited  in  the 
office  of  the  peace  justice  court  and  in  that  of  the  tribunal  of  com- 
merce within  whose  jurisdiction  the  company  is  formed  a  duplicate 
of  the  articles  of  agreement  constituting  the  basis  of  the  company,  if 
these  articles  are  unauthentieated,  or  a  certified  copy  of  the  same  if 
they  have  been  acknowledged  before  a  notaiw. 

In  the  case  of  mixed  joint-stock  companies  (en  commandite)  and  of 
anonymous  companies,  there  shall  be  appended  to  the  said  articles  of 
agreement  (1)  a  copy  of  the  notarial  document  showing  the  subscrip- 
tion of  the  capital  stock  and  the  one-fourth  payment  prescribed  by 
the  present  act;  (2)  a  certified  cop}7  of  the  decisions  adopted  by  the 
general  meeting  in  the  cases  provided  for  by  articles  4  and  24. 

Moreover,  there  must  be  joined  to  the  articles  of  agreement,  when 
the  company  is  an  anonymous  one,  a  duly  certified  and  authenticated 
list  of  the  subscribers,  giving  the  name,  surname,  occupation,  residence 
of  each  one,  as  well  as  the  number  of  shares  held  by  each  associate. 

Art.  56.  A  copy  of  the  articles  of  agreement  and  of  the  appended 
documents  is  published,  within  the  space  of  one  month  aforesaid,  in 
one  of  the  newspapers  designated  for  legal  notices. 

This  publication  in  said  newspaper  shall  be  proved  by  a  copy  of  the 
paper  in  question,  duly  certified  to  by  the  printer,  authenticated  by 
the  mayor,  and  recorded  within  three  months  from  the  date  thereof. 

A  failure  to  observe  the  prescriptions  of  the  preceding  article  and 


68 


PA  NAM  A   CANAL  TITLE. 


present  article  will  nullify  the  entire  proceedings  as  to  the  associates 
of  the  company;  but  no  breach  of  any  of  said  prescriptions  may  be 
pleaded  by  the  members  as  against  third  parties. 

Art.  57.  The  copy  above-mentioned  must  contain  also  the  names 
of  associates  other  than  shareholders;  the  official  name  adopted  by  the 
company  and  the  locality  of  its  legal  residence;  the  names  of  such 
associates  as  are  authorized  to  manage,  direct,  and  sign  for  the  com- 
pany; the  amount  of  the  capital  stock  and  the  amount  of  the  values 
furnished  or  to  be  furnished  by  the  shareholders;  the  dale  of  the 
launching  of  the  company  and  that  of  its  intended  dissolution,  as  well 
as  the  time  at  which  the  deposits  of  documents  aforesaid  were1  made 
in  the  offices  of  the  peace  justice  court  and  of  the  tribunal  of  commerce. 

Art.  58.  The  copy  must  state  whether  the  company  is  one  under  a 
collective  name,  or  en  commandite  simple,  en  commandite  by  share-, 
or  anonymous,  or  one  with  variable  capital. 

If  the  company  is  unonymous,  the  copy  must  state  the  sum  of  capital 
stock  paid  in  species  and  the  sum  paid  otherwise  than  in  specie, 
together  with  the  amount  of  pro  rata  assessment  which  must  be  levied 
on  the  profits  in  order  to  constitute  the  reserve  fund  of  the  company. 

Finally,  if  the  company  is  one  with  variable  capital  stock,  the  copy 
must  indicate  the  sum  or  amount  below  which  the  said  capital  stock 
can  not  be  lawfully  reduced. 

Art.  59.  In  case  the  company  have  several  establishments  doing 
business  in  various  districts,  the  deposit  prescribed  by  article  55  and 
the  publication  required  by  article  56  must  be  made  in  each  district 
where  such  establishments  exist. 

In  such  cities  as  are  divided  into  several  districts  it  will  be  sufficient 
to  make  said  deposit  in  the  office  of  the  peace  justice  court  within 
whose  jurisdiction  or  district  lies  the  chief  of  these  establishments. 

Art.  60.  The  copy  of  the  acts  and  documents  deposited  is  to  be 
signed,  in  the  case  of  public  official  documents,  by  the  notary;  in 
the  case  of  documents  under  private  signature  merely  by  the  associates 
in  collective  name,  by  the  managers  of  associations  en  commandite,  or 
mixed  joint  stock  companies,  and  by  the  administrators  in  the  case  of 
anonymous  companies. 

Art.  61.  The  formalities  prescribed  and  penalties  imposed  by  arti- 
cles 55  and  56  apply  to: 

All  acts  and  resolutions  looking  to  the  amendment  of  the  company's 
by-laws,  to  the  prolongation  of  the  company's  existence  beyond  the 
period  of  time  originally  agreed  upon  and  fixed,  to  dissolution  before 
the  expiration  of  the  said  period  of  time,  and  to  the  manner  of  winding 
up  the  affairs  of  the  concern,  to  any  change  in  the  official  name  of  the 
company  or  to  any  change  among,  or  withdrawal  of,  members. 

Such  decisions  as  are  arrived  at  in  the  cases  provided  for  by  articles 
19,  37,  46,  47,  and  49,  herein  above  set  forth,  are  also  governed  by  the 
requirements  of  articles  55  and  56.  (Art.  19  concerns  associations  en 
commandite.) 

Art.  62.  The  following  documents  are  not  subject  to  the  deposit 
and  publication  requirements  aforesaid:  Documents  setting  forth  an 
increase  or  decrease  of  the  capital  stock,  made  in  accordance  with  the 
terms  of  article  48  herein  above,  or  the  withdrawal  of  members  other 
than  managers  or  administrators,  such  withdrawal  taking  place  within 
the  terms  of  article  52  hereof. 

Art.  63.  In  the  case  of  mixed  joint-stock  companies  or  of  anony- 
mous companies,  any  person  may  demand  a  view  of  the  documents 


PANAMA   CANAL  TITLE. 


09 


deposited  in  the  office  of  the  peace  justice  court  jind  of  the  tribunal 
of  commerce,  and  may  even  demand,  at  his  own  cost,  a  certified  copy 
of  the  said  documents,  from  the  court  clerk  or  from  the  notary  in 
charge  of  the  same. 

Likewise  any  person  may,  for  a  sum  not  exceeding  one  franc, 
demand  at  the  legal  residence  of  the  company  a  certified  copy  of  its 
by-laws. 

Finally,  a  copy  of  the  deposited  documents  must  be  publicly  exposed 
in  the  offices  of  the  company. 

Art.  64.  In  all  acts  or  documents,  invoices,  notices,  publications, 
etc..  whether prhrfrd  or  holoi/raphic,  emanating  from  anonymous  com- 
panies or  from  mixed  joint-stock  companies,  the  official  name  of  the 
concern  must  always  be  followed  by  these  words,  written  out  in  full 
and  legibly:  w%  Anonymous  company"  or  "Mixed  joint-stoc/,  company" 
together  with  the  amount  of  the  capital  stock. 

In  case  the  company  has  availed  itself  of  the  right  granted  it  fry 
article  48  hereof,  this  must  be  shown  by  the  addition  of  the  following 
words,  "  with  variable  capital  stock." 

Any  breach  of  the  preceding  requirements  is  punished  with  a  pen- 
alty or  tine  of  not  less  than  fifty  nor  more  than  one  thousand  francs. 

Art.  65.  Articles  42,  43,  44,  45,  and  46  of  the  Code  of  Commerce 
are  hereby  repealed. 


LAW  OF  AUGUST  1,  1893,  AMENDING  LAW  OF  JULY  24,  1867,  CONCERN- 
ING ASSOCIATIONS  HAVING  SHARES  OF  STOCK. 

Article  1.  Paragraphs  1  and  2  of  article  1  of  the  law  of  July  24, 
1867,  are  modified  as  follows: 
Paragraph  1: 

"Associations  of  commandite  can  not  divide  their  capital  into  shares 
or  parts  of  shares  of  less  than  25  francs  when  the  capital  does  not 
exceed  200,000  francs,  of  less  than  100  francs  when  the  capital  exceeds 
200,000  francs." 

Paragraph  2: 

"They  can  not  be  definitive^  constituted  except  after  subscription 
of  the  total  capital  and  the  payment  in  cash  by  each  shareholder,  of 
the  amount  of  the  shares  or  parts  of  shares  subscribed  by  him,  when 
they  do  not  exceed  25  francs,  and  of  the  quarter  at  least  of  the  shares 
when  they  are  of  100  francs  and  over." 

2.  Article  3  is  altered  thus: 

""The  shares  are  in  shareholders'  names  [i.  e.,  not  to  bearer]  until 
fully  paid  up  (entiere  liberation).  The  shares  representing  contribu- 
tions shall  be  free  (considered  paid  up)  from  the  time  of  the  definitive 
organization.  These  shares  can  not  be  withdrawn,  and  are  not  nego- 
tiable before  two  years  after  the  definitive  organization  of  the  associa- 
tion. The  owners,  intermediate  transferees,  and  the  subscribers  are 
bound  in  solido  for  the  amount  of  the  shares.  Every  subscriber  or 
shareholder  who  has  transferred  his  share,  ceases,  two  years  after  the 
transfer,  to  be  responsible  for  the  payments  not  called  for." 

3.  To  article  8  are  added  the  following  provisions: 

"The  suit  to  have  declared  the  nullity  of  the  association  or  of  acts 
and  votes  subsequent  to  its  constitution,  is  inadmissible  when,  before 
suit  brought,  the  cause  of  nullity  has  ceased  to  exist.  The  action  to 
enforce  responsibility  for  the  facts  from  which  the  nullity  resulted, 


70 


PANAMA  CANAL  TITLE. 


ceases  also  to  be  admissible  when,  before  suit  brought,  the  cause  of 
nullity  ceases,  and  if,  besides,  three  years  have  elapsed  since  the 
date  when  the  nullity  arose.  If,  to  put  an  end  to  the  nullity,  a  general 
meeting  should  be  called,  the  action  of  nullity  will  not  be  admissible 
after  the  date  of  the  regular  calling  of  that  meeting.  Actions  of  nul- 
lity against  acts  constituting  the  association  are  prescribed  in  six  years. 
This  prescription  can  not  be  made  use  of  before  the  expiration  of  the 
ten  years  following  the  promulgation  of  the  present  law." 

4.  To  paragraph  1  of  article  27  is  added  the  following: 
"Owners  of  shares  less  than  the  number  determined  to  qualify  for 

admission  to  meetings  can  unite  to  make  up  the  proper  number  and 
be  represented  by  one  among  them." 

5.  In  paragraph  1  of  article  4:4,  for  the  words  "  responsible  in  solido 
to  third  persons  without  prejudice  to  the  rights  of  shareholders"  is 
substituted  the  following:  "responsible  in  solido  to  third  persons  and 
to  the  shareholders  for  the  damage  resulting  from  that  annulment." 

To  the  same  article  is  added  the  following  paragraph: 
"The  action  for  nullity  and  that  upon  responsibility  resulting  from 
it  are  subjected  to  the  provisions  of  article  8  above." 

6.  To  the  law  are  added  the  following  provisions: 

"divers  provisions. 

"Art.  68.  Whatever  may  he  their  objects,  associations  of  commandite 
cyr  anonymous  associations  which  shall  be  constitute  I  in  thr  munner  given 
in  the  Code  of  Commerce  or  in  the  present  law  are  subjected  to  the  hnos 
and  customs  of  coannerce. 

"Art.  09.  Hypothecation  (mortgage)  can  be  consented  to  in  the 
name  of  every  commercial  association  by  virtue  of  the  powers  result- 
ing from  its  act  of  formation,  even  when  that  is  a  now  notarial  docu- 
ment, or  from  votes  or  authorizations  taken  or  made  in  the  manner 
prescribed  by  tin4  said  act.  The  document  of  hypothecation  shall  be 
authenticated  as  provided  in  2127  of  the  Civil  Code. 

"Art.  70.  In  ases  in  which  associations  have  continued  to  pay  the 
interest  or  dividends  of  stock,  bonds,  or  other  certificates  of  obligation 
by  way  of  a  drawing  by  lot,  they  can  not  repeat  these  sums  when  the 
certificate  is  presented  for  reimbursement. 

* '  TRANSITORY  PROVISIONS." 
*  *  *  *  *  *  * 


EXHIBIT  4. 

JUDGMENT  OF  MARCH   19,  1902  (CIVIL  TRIBUNAL  OF  THE  SEINE), 
APPROVING  LIQUIDATOR'S  CONSENT  TO  SALE. 

Gautron,  in  his  Official  Capacity,  |  First  ^ 

versus  f    No  4 

New  Panama  Canal  Company.  ) 

Republic  of  France,  In  the  name  of  the  people  of  France: 

The  civil  tribunal  of  first  instance  of  the  department  of  the  Seine, 
sitting  at  the  palace  of  justice,  renders  in  open  and  public  session  of 
its  first  division,  the  judgment  the  tenor  of  which  is  as  follows: 
Hearing  of  Wednesday,  March  19,  1902. 


PANAMA  CANAL  TITLE.  71 


The  Court,  In  view  of  the  request  presented  by  Gautron,  in  his 
official  capacity  of  liquidator  for  the  Universal  I  nteroccanic  (  anal  Com- 
pany of  Panama,  said  request  being  signed  by  De  Bieville,  his  solicitor 
and  worded  as  follows: 

To  (lie  honorable  president  and  justices  of  the  first  division  of  the  civil  tribunal  of  the  depart- 
ment of  the  Seine: 

The  petitioner,  M.  Pierre  Gautron,  liquidator  of  the  Universal  Interoceanic  Pan- 
ama Canal  Company,  residing  at  the  office  of  the  liquidation,  Chaussee  d'Antin 
street,  No.  42,  having  de  Bieville  as  solicitor,  has  the  honor  to  state: 

That  negotiations  are  pending  between  the  New  Panama  Canal  Company  and  the 
United  States  Government  for  the  transfer  to  said  Government  of  the  whole  of  the 
rights  and  property  owned  by  the  New  Panama  Canal  Company  on  the  Isthmus  of 
Panama  as  well  as  its  maps  and  records  in  Paris. 

That  these  negotiations  have  resulted  in  an  offer  made  by  the  new  company  to 
the  United  States  of  America  for  the  transfer  of  said  propertv  in  return  for  the  sum 
of  $40,000,000  (i.  e.,  about  205,000,000  francs),  said  offer  to  remain  in  force  until 
March  S,  1903. 

That  the  liquidator  of  the  Universal  Interoceanic  Panama  Canal  Company  has 
been  informed  of  the  negotiations  and  the  offer  above  referred  to. 

That  certain  differences  having  arisen  between  the  new  company  and  the  petitioner 
in  his  capacity  of  liquidator,  M.  Gautron,  in  his  said  capacity,  has  been  authorized 
by  decree  of  the  civil  tribunal  of  the  Seine,  dated  August  2,  1901,  to  compromise 
with  the  New  Panama  Canal  Company  upon  all  legal  questions  which  might  arise 
relating: 

First.  To  the  determination  of  the  price  and  conditions  to  be  proposed  to  the 
eventual  purchaser  of  the  concession  and  the  canal  works  and  all  the  assets  of  the 
new  company. 

Second.  To  the  division  between  the  new  company  and  the  liquidation  of  the 
proceeds  of  the  sale,  in  case  that  sale  be  effected. 
That  the  arbitrators  have  decided: 

First.  That  the  liquidator  of  the  Universal  Interoceanic  Canal  Company  of  Panama 
should,  before  the  final  division,  take  out  of  the  price  of  the  sale  of  the  enterprise  to 
the  United  States  Government,  the  sum  of  20,000,000  francs. 

Second.  That  after  this  sum  has  been  taken  out,  the  New  Panama  Canal  Company 
should,  for  its  part,  take  out  the  sum  of  5,000,000  francs. 

Third.  That  the  balance  of  the  said  sum  should  be  divided  between  the  parties 
entitled  in  the  proportion  of  60  per  cent  thereof  for  the  liquidator  of  the  Universal 
Interoceanic  Canal  Company  of  Panama  and  of  40  per  cent  thereof  for  the  New 
Panama  ('anal  Company. 

That  the  liquidator,  as  well  as  M.  Lemarquis,  the  legal  representative  of  the  bond- 
holders, has  received  a  certain  number  of  notifications  and  oppositions  to  the  sale 
emanating  from  opponents  to  the  proposed  transfer  to  the  United  States  Government, 

That  at  this  time  the  new  company  (in  view  of  the  position  assumed  by  the  oppo- 
nents of  the  Panama  Canal  enterprise,  and  of  the  objections  raised  by  them),  requests 
the  liquidator  to  petition  for  the  approval  by  the  court  under  the  provision  of  the  law 
dated  July  1,  1893,  and  so  far  as  the  liquidation  is  concerned,  of  the  agreement 
entered  into  between  the  new  company  and  the  liquidator  for  the  sale  to  the  Gov- 
ernment of  the  United  States  of  America,  of  the  whole  of  the  property  of  the  cor- 
poration on  the  Isthmus,  as  well  as  the  maps  and  records  in  Paris,  for  the  sum  of 
$40,000,000  (about  205, 000, 000  francs),  and  subject  to  modifications  to  be  procured  from 
the  Government  of  Colombia  as  to  articles  21  and  22  of  the  concessionary  contract. 

That  the  liquidation  of  the  old  Panama  Canal  Company  is  therefore  directly  inter- 
ested in  the  proposed  transfer,  since  the  larger  portion  of  the  eventual  proceeds  of 
the  sale  will  be  turned  over  to  it. 

That  under  article  10  of  the  act  of  July  1,  1893,  all  acts  tending  to  alienate  any 
assets  of  the  old  company,  all  contracts  entailing  a  transfer  or  contribution  of  the 
whole  or  a  part  of  the  assets  of  the  old  concern,  emanating  from  the  liquidator  of  the 
Universal  Interoceanic  Canal  Company  of  Panama,  shall  be  subject  to  the  approval 
of  the  civil  tribunal  of  the  Seine,  which  shall,  upon  the  report  of  one  of  the  justices, 
pass  on  the  question  in  open  court. 

Now,  therefore,  your  said  petitioner  in  his  official  capacity  respectfully  requests 
and  begs  that  it  please  the  honorable  president  and  justices  of  this  court  to  approve 
so  far  as  the  liquidation  of  the  Universal  Interoceanic  Canal  Company  of  Panama  is 
concerned,  the  offer  made  by  the  New  Panama  Canal  Company  with  the  assent  of 
the  liquidator,  to  the  Government  of  the  United  States  of  America,  to  transfer  to  said 
Government  all  rights  and  property  owned  by  the  new  company  on  the  Isthmus  of 
Panama  as  well  as  its  maps  and  records  in  Paris  for  the  sum  of  $40,000,000  (i.  e., 


72 


PANAMA    CANAL  TITLE. 


about  205,000,000  francs),  said  offer  to  remain  in  force  until  March  8,  1903,  and  the 
eventual  proceeds  of  the  sale  to  be  divided  according  to  the  award  made  by  the  arbi- 
trators, subject,  however,  to  the  modification  to  be  secured  from  the  Government  of 
the  Republic  of  Colombia,  as  to  articles  21  and  22  of  the  concessionary  contract. 

And  to  order  that  their  decree  shall  be  published  according  to  act  of  July  1,  1893. 

Under  all  reservations;  and  it  will  be  justice. 

(Signed)  De.  Bieville. 

In  view  of  the  documents  exhibited,  namely: 

The  order  issued  by  the  president  of  the  court,  dated  March  18, 
1902,  appended  to  said  petition,  directing  "that  the  petition  be  com- 
municated to  the  attorney  for  the  Republic,  and  that  M.  Le  Berquier, 
justice,  is  hereby  appointed  to  make  a  report.  Done  at  the  palace  of 
justice,  Paris.  March  L8,  L902,  and  signed  Ditte." 

The  conclusions  of  the  attorney  for  the  Republic  likewise  appended 
to  said  petition,  which  are  as  follows:  k,The  attorney  for  the  Repub- 
lic does  not  object.  Rendered  in  the  attorney's  office  March  18.  1902. 
Signed  lVzous." 

Articles  1<)  and  1 1  of  the  act  of  July  1,  1893. 

And  having  heard  Justice  Le  Berquier  in  his  report  and  Mr.  Rome, 
deputy  attorney  for  the  Republic  in  his  conclusions: 

And  after  having  deliberated  in  conformit}T  with  the  law,  judging 
in  first  resort: 

Whereas,  under  article  10,  of  the  act  of  July  1,  1893,  all  acts  of 
realization  of  assets,  all  contracts  entailing  a  transfer  or  contribution 
of  the  whole  or  of  part  of  the  assets  of  the  concern,  emanating  from 
the  liquidator  of  the  Universal  Interoceanic  Canal  Company  shall  be 
subject  to  the  approval  by  the  civil  tribunal  of  the  Seine; 

Whereas  Gautron,  in  his  capacity  of  liquidator  of  the  Universal 
Panama  Canal  Company,  prays  that  the  court  confirm,  as  far  as  the 
liquidation  is  concerned,  the  offer  made  by  the  New  Panama  Canal 
Company,  with  his  own  assent  to  the  United  States  Government  to 
transfer  to  the  latter  all  its  rights  and  property  as  well  as  its  maps 
and  records  in  Paris,  for  the  sum  of  $40. 000,000; 

Whereas  it  appears  from  the  documents  in  the  case  that  such  request 
should  be  granted: 

For  these  reasons: 

Confirms,  so  far  as  the  liquidation  of  the  Universal  Interoceanic 
Panama  Canal  Company  is  concerned,  the  offer  made  by  the  New  Pan- 
ama Canal  Company,  with  the  assent  of  the  liquidator  to  the  United 
States  Government,  to  transfer  to  said  Government  the  whole  of  the 
property  and  rights  owned  by  the  New  Panama  Canal  Company  on 
the  Isthmus  of  Panama,  as  well  as  its  maps  and  records  in  Paris,  for 
the  sum  of  $10,000,000  (i.  e.,  about  205,000,000  francs),  said  offer  to 
remain  in  force  until  March  4.  1903,  the  actual  proceeds  of  the  sale  to 
be  divided  according  to  the  award  made  by  the  arbitrators,  subject  to 
the  modification  to  be  secured  from  the  Government  of  the  Republic 
of  Colombia  as  to  articles  21  and  22  of  the  concessionary  contract. 

Orders  this  decree  to  be  published  according  to  the  act  of  July  1, 
1893. 

(Signed)  Ditte  and  Barue. 

Done  and  decreed  by  Messrs.  Ditte,  president:  Monier,  vice-presi- 
dent: Le  Berquier.  judge:  in  the  presence  of  Messrs.  Chauvin  and 
Planchenault,  special  judges:  Rome,  substitute  for  the  attorney  for 
the  Republic,  assisted  by  Barue,  clerk,  on  Wednesday.  March  19,  i:*<>2. 

In  consequence  of  the  above,  the  President  of  the  Republic  of 


PANAMA  CANAL  TITLE. 


73 


Franco  instructs  and  directs  all  sheriffs,  when  requested,  to  enforce 
the  above  decree,  attorneys-general  and  the  attorneys  for  the  Republic 
in  the  courts  of  first  instance  to  give  them  assistance,  and  all  com- 
manders and  officers  of  the  public  force  to  give  them  the  aid  of  arms 
when  legally  requested. 

In  witness  whereof  the  minute  of  this  decree  was  signed  by  the 
president  and  the  clerk. 

Recorded  at  Paris  April  2,  1902,  folio  86,  division  11.  Received 
9  francs  38  centimes. 

(Signed)  Bartoszewski. 

By  the  court: 

(Signed)  Floquet. 


EXHIBIT  5. 

JUDGMENT  OF  JULY  3,  1902  (CIVIL  TRIBUNAL  OF  THE  SEINE),  DECIDING 
AGAINST  DONNADIEU,  THE  BONDHOLDER,  ON  TIERCE  OPPOSITION. 

[No.  1.  Taken  from  the  minutes  of  the  clerk's  office  of  the  civil  tribunal  of  first  instance  of  the 
department  of  the  Seine,  sitting  in  the  palace  of  justice  at  Paris.] 

Gautron  ) 

Vt  rsus      V  First  chamber,  tirst  section.    3d  July,  1902. 
Don n adieu.  ) 

The  civil  tribunal  of  first  instance  of  the  department  of  the  Seine, 
sitting  in  the  palace  of  justice  at  Paris,  has  rendered  in  public  session 
of  the  first  chamber  of  that  tribunal  the  following  judgment: 

Session  of  Thursday,  the  3d  of  July.  1902. 

Between  M.  Gautron,  liquidator  of  the  Universal  Company  of  the 
Interoceanic  Canal  of  Panama,  residing  at  the  headquarters  of  the  said 
company  in  liquidation,  42  rue  Chaussee  d'Antin,  defendant  in  tierce 
opposition,  appearing,  submitting  brief  and  arguing  by  Me.  Thieblin. 
advocate,  assisted  by  Me.  de  Bieville,  solicitor,  on  one  part. 

And,  first,  the  New  Panama  Company,  an  anonymous  company, 
having  its  headquarters  at  Paris,  rue  Louis  le  Grand  No.  7,  acting 
through  its  president  and  the  members  of  its  council  of  administra- 
tion, plaintiff,  appearing  and  filing  a  brief  by  Me.  Dubourg,  solicitor. 

Second.  M.  Emmanuel  Donnadieu,  proprietor,  residing  at  Chateau 
de  Blomac  (Aude),  tiers  opposant,  defendant,  appearing  and  submitting 
brief  by  Me.  Caillet,  solicitor. 

Third.  M.  Lemarquis,  residing  at  Paris,  3  rue  Louis  le  Grand,  act- 
ing in  his  own  name  and  as  mandataire  of  the  bondholders  of  the  com- 
pany of  the  Interoceanic  Canal  of  Panama,  intervenor,  appearing  and 
submitting  brief  by  Me.  Charneau.  solicitor,  on  the  other  part;  without 
their  said  present  characters  being  able  to  prejudice  in  any  manner 
the  rights  and  respective  interests  of  the  parties. 

POINTS  OF  FACT. 

1.  Tierce  opposition. — M.  Donnadieu  claiming  that  he  was  a  creditor 
of  the  company  in  liquidation  of  the  Interoceanic  Canal  of  Panama,  for 
a  principal  sum  of  135,624  francs  99  centimes,  and  the  interest  on  said 
sum,  by  virtue  of  a  judgment  of  this  tribunal  of  January  25,  1893, 
confirmed  by  a  decree  of  the  court  of  Paris  of  June  29,  1893,  both 
recorded;  that  the  liquidator  of  the  Panama  Canal  Company  had  con- 


74 


l'ANAMA  CANAL  TITLE. 


tributed  to  an  anonymous  company  called  the  New  Panama  Canal 
Company,  in  June,  1894,  by  agreements  approved  by  judgments 
recorded  here  June  29  and  August  8,  L894,  tlie  concession  of  the  canal, 
the  works  executed  on  the  Isthmus,  the  materiel,  the  plans  and  draw- 
ings, the  rights  of  the  company  in  liquidation  as  to  the  Panama  Kail- 
road,  etc.,  for  the  price  of  60  per  cent  of  the  profits  to  arise  from 
carrying  on  the  canal;  that  the  new  company  had,  in  January,  1902] 
made  an  offer  to  sell  to  the  Government  of  the  United  States  of  Amer- 
ica for  $40,000,000,  the  totality  of  its  properties  and  rights  on  the 
Isthmus  and  its  plans  and  archives,  that  is  to  say,  what  the  liquidator 
had  contributed;  that  M.  Gautron  as  liquidator  had  given  his  consent 
to  that  offer  and  had  asked  the  approval  of  it  by  the  tribunal,  which 
had  been  accorded  by  judgment  of  March  19,  1902,  in  conformity  with 
the  law  of  July  1,  1893;  that  according  to  the  provisions  of  article  11 
of  the  said  law  M.  Donnadieu  had  a  right  to  attack  by  tierce  opposi- 
tion that  judgment  of  approval  and  that  he  intended  to  make  use  by 
the  present  proceeding  of  that  right;  that  in  effect  there  were  sub- 
mitted to  the  approval  of  the  tribunal  by  article  10  of  the  law  of  July 
1, 1893,  all  acts  in  realization  of  assets,  all  contracts  carrying  a  cession 
or  contribution  of  the  whole  or  part  of  the  company's  assets,  pro! 
ceeding  from  the  liquidator  of  the  Universal  Company  of  the  Inter- 
oceanic  Canal  of  Panama;  that  the  offer  made  to  the  Government 
of  the  United  States  did  not  emanate  from  the  liquidator  of  the  Uni- 
versal  Company,  but  from  the  new  company;  that  it  did  not  carry  and 
will  not  carry  a  cession  of  the  assets  of  the  Universal  Company  in 
Liquidation,  since  the  properties  offered  had  already  been  ceded  by  the 
Liquidation  of  [to?]  the  new  company  by  the  approved  contribution 
made  to  it  by  the  Liquidation  in  June,  1*894;  that  in  considering  as  a 
cession  of  part  of  the  assets  of  the  company  in  Liquidation  the  consent 
given  by  the  Liquidator  to  the  offer  made  b}r  the  new  company,  an 
assent  which  constituted  undoubtedly  the  abandonment  of  important 
rights,  the  approval  thereof  could  only  be  asked  and  obtained  after 
agreement  made  between  the  new  company  and  the  liquidator  to  regu- 
late the  conditions  of  that  cession  and  fix  the  price  of  the  compensation 
for  the  rights  ceded;  that  such  an  agreement,  which  would  itself  be  a 
subject  for  approval,  did  not  appear  to  exist;  that,  in  any  case,  it  was 
not  such  an  agreement  which  had  been  approved;  that  such  an  agree- 
ment was  not  examined  at  the  time  of  the  judgment  of  March  19,  19021 
and  could  not  be,  as  was  intended  by  the  law  of  July  1,  1893  (Art.  II), 
discussed  before  the  tribunal  by  the  creditors  of  the  liquidation; 
that,  consequently,  there  was  no  subject-matter  for  approval  and 
the  judgment  of  lt>  March,  1902,  should  be  set  aside;  that,  on  the 
merits,  as  an  additional  point,  the  tribunal  should  not  have 
approved  the  offer  of  the  cession  which  the  new  company  was  without 
power  to  make;  that,  indeed,  the  new  company,  an  anonymous  com- 
pany and  a  moral  person  had  life  and  power  only  within  the  limits  of 
its  by-laws  and  had  not  the  power  to  carry  on  operations  not  comprised 
within  the  objects  of  the  company;  that  article  20  of  the  by-laws  of 
the  new  company  limits  the  objects  of  the  company  to  the  construction 
and  cariwing  on  of  the  canal  and  its  accessories;  that  consequently  the 
company  had  not  the  right  to  sell  what  it  was  its  business  to  carry  on, 
to  perform  an  act  which  not  only  was  outside  of  its  object,  but  even 
rendered  it  unable  to  carry  out  that  object;  that  the  assent  of  the 
Liquidator  could  not  give  it  power  in  this  respect;  that  the  power  of 


PANAMA  CANAL  TITLE. 


75 


the  company  depended  on  its  by-laws,  and  that  the  company  could  not 
alter  them,  and  in  that  way  acquire  the  power  which  it  lacked;  the 
general  law  and  the  company  compact  itself  (art.  60)  forbade  the  altera- 
tion of  its  object  in  its  essence,  a  fortiori  the  suppression  of  it;  con- 
sidering also,  and  as  an  additional  point,  if  the  company  had  the  power, 
it  had  not  the  right  to  sell  the  canal;  that,  indeed,  this  canal  and  its 
accessories  had  been  contributed  to  it  by  the  liquidation  in  exchange, 
especially,  for  the  granting  to  it  of  60  per  cent  of  the  profits  to  arise 
from  carrying  on  the  canal;  that  the  new  company  could  not,  conse- 
quently, suppress  the  remuneration  promised  by  it  to  the  contributor 
by  suppressing  the  source  of  the  benefits  to  be  divided  and  by  replac- 
ing them  with  the  price  of  the  sale,  over  which  the  by-laws  did  not 
jive  any  right  to  the  contributor. 

Considering  that  the  disposing  part  of  the  judgment  of  the  19th  of 
March,  1902,  in  saying  that  the  ultimate  price  of  the  cession  should  be 
divided  conformably  to  the  decision  of  the  arbitrators,  left  it  to  be 
understood  that  this  question  had  been  submitted  to  a  tribunal  of  arbi- 
tration, but  that  there  w  as  in  this  a  violation  of  article  3  of  the  Law  of 
the  1st  of  July,  1893,  which  provides  that  all  acts  proceeding  from  the 
liquidator  should  be  placed  before  the  civil  tribunal  of  the  Seine,  and 
that  the  tribunal  ought  not  indirectly  to  sanction  by  its  judgment  this 
violation  of  law. 

Considering  that  the  plaintiff  was  a  creditor  of  the  liquidation  of  the 
Universal  Company,  which  had  contributed  the  canal  to  the  new  com- 
pany; that  he  was  interested  in  maintaining  the  conditions  of  that 
Contribution,  which  was  made  in  his  interest  and  had  been  made  in 
conformity  with  the  law  of  July  1,  1893,  passed  to  protect  him;  that, 
Ifter  a  judgment  of  approval  designed  to  protect  his  rights,  he  was, 
accordingly,  justified  in  requiring  respect  for  the  by-laws,  which  were 
the  guarantee  of  third  persons,  as  well  as  the  rule  for  the  associates, 
the  execution  of  the  contract  of  contribution  and  obedience  to  the 
law;  that  he  had  then  a  right  to  oppose  the  approval  of  a  combination 
which  violated  at  once  the  by-laws,  the  contract,  and  the  law. 

Considering,  on  the  other  hand,  that  it  is  proper  to  remark  that  the 
new  company  after  having  proclaimed  and  caused  to  be  established  by 
the  most  eminent  engineers  the  possibilit}-  of  constructing  the  canal 
and  of  obtaining  profit  from  it,  had  never  made  the  least  effort  to 
accomplish  its  work;  that  it  appeared  never  to  have  thought  of  any- 
thing but  to  assure  to  its  stockholders  the  reimbursement  of  their 
shares,  and  the  sale  to  the  United  States  was  not  undertaken  by  it  except 
because  it  wished  to  procure,  not  only  that  reimbursement,  but  also 
very  important  profits;  that  such  a  result  would  not  be  reached  except 
by  a  sacrifice  of  the  creditors  of  the  liquidation  reduced  to  the  receipt 
of  an  insignificant  dividend  for  the  benefit  of  financiers  who,  it  should 
not  be  forgotten,  had  paid  up  the  shares  of  the  new  company  which 
the}r  held,  not  with  their  own  funds,  but  with  those  which  they  had 
improperly  received  from  the  new  ( ?)  company  and  which  the  courts  had 
condemned  them  to  reimburse;  that  this  enrichment  of  themselves  to 
the  detriment  of  the  liquidation  would,  besides,  be  obtained  at  the 
price  of  the  abandonment  of  an  undertaking  rightly  called  national; 
that  thus,  then,  and  from  all  points  of  view,  there  should  not  have1 
been  an  approval. 

Done  by  document  of  Thiellement,  bailiff  at  Paris,  dated  April  23, 
1902,  to  make  summons  on  M.  Gautron,  as  liquidator  above  mentioned. 


76 


PANAMA   CANAL  TITLE. 


to  appear  within  eighteen  full  days,  as  by  law  allowed,  and  througq 
the  aid  of  the  solicitor  constituted  duly  before  the  president  and  judge! 
composing  the  civil  tribunal  of  the  Seine  sitting  at  the  palace  of  justici 
of  Paris  at  LI  o'clock  in  the  morning,  in  order,  for  the  reasons  abovj 
given: 

[Asks  of  the  tribunal]  to  have  M.  Donnadieu  admitted  as  tier! 
opposant  to  the  judgment  of  the  19th  of  March,  L902,  to  declare  that 
the  oiler  made  by  the  Universal  Company  (sic)  to  the  Government  of 
the  United  States  of  America  was  not  susceptible  of  approval  accord- 
ing to  the  provisions  of  article  10  of  the  law  of  July  1.  L902;  as  an 
additional  point  on  the  merits,  to  declare  that  the  ultimate  cessiol 
of  the  canal  by  the  new  company  was  beyond  the  powers  of  that  com- 
pany; to  declare  that  the  cession  offered  violated  the  by-laws  of  thi 
new  company  and  the  rights  which  belonged  to  the  liquidation  of 
the  Universal  Company  in  consequence  of  its  contribution;  to  declare 
that  the  liquidator  had  not  been  and  was  not  able  to  carry  a  mattel 
tending  to  cause  his  rights  to  be  respected  before  any  other  tribunal 
than  the  civil  tribunal  of  the  Seine,  especially  before  the  tribunal  of 
arbitration;  to  declare  that  the  cession  offered  was  contrary  to  the 
rights  and  the  interests  of  the  creditors  of  the  liquidation  of  the  Uni 
versal  Company  of  the  [nteroceanic  Canal  of  Panama.  Consequently] 
to  declare,  as  a  matter  of  law  and  on  the  merits,  that  there  should  not 
have  been  the  approval,  asked  for  by  Gautron  as  liquidator  so  far 
as  concerns  the  liquidation  of  the  Universal  Company,  of  the  oiler 
made  by  the  new  Panama  Canal  Company,  w  ith  his  assent,  to  the  Govl 
eminent  of  the  United  States  of  America,  of  all  the  property  and 
rights  on  the  Isthmus  of  Panama,  together  with  the  plans  and  archive! 
of  Paris  for 'S-10,000,000.  Consequently,  to  set  aside  purely  and  sim- 
ply the  judgment  of  March  19,  1902,  to  which  the  tierce  opposition 
was  made;  and  to  condemn  M.  Gautron  as  liquidator  in  the  costs. 
Upon  this  summons,  which  contained  the  constitution  of  M.  Cailleq 
solicitor  for  M.  Donnadieu,  M.  de  Bieville  was  constituted  solicitor 
for  M.  Gautron  as  liquidator  by  act  done  at  the  palace  on  the  2sth  of 
April,  1902. 

11.  The  demand  of  release  from  the  prohibitions  against  the  sale  of 
the  Panama  Canal. 

The  New  Panama  Canal  Company  claims  that  according  to  the  act 
done  out  of  court,  through  Thiellement,  bailiff  of  Paris,  dated  the  18th  of 
February,  1902,  appearing  by  copy,  M.  Donnadieu  had  made  prohibition 
to  the  plaintiff  company  to  proceed  with  the  sale  of  the  canal  of  Panama, 
of  the  concession,  and  of  its  accessories,  with  the  declaration  that,  in 
default  of  the  said  company's  acceding  to  this  prohibition,  he  would 
proceed  hy  all  legal  means  as  well  against  it  as  against  the  proper  public 
authorities  of  the  United  States  of  North  America,  to  have  established 
adjudged  and  sanctioned  the  invalidity  of  the  proposed  sale;  that,  on 
the  other  hand,  according  to  another  act  done  out  of  the  court  through 
the  instrumentality  of  the  same  bailiff,  dated  February  2, 1902,  served 
upon  the  ambassador  of  the  United  States  as  representative  of  the 
Government  of  the  United  States  of  North  America,  as  appeals  from 
the  notification  made  to  the  plaintiff  hy  copy  of  the  said  document, 
through  Thiellement,  bailiff,  dated  the  26th  of  February,  1902] 
appearing  by  copy,  the  said  M.  Donnadieu  declared  that  he  opposed 
the  cession  of  the  canal  of  Panama,  declaring  that  if,  notwithstanding 
his  protestation,  agreements  concerning  that  cession  were  concluded, 


PANAMA  CANAL  TITLE. 


77 


ie  would  contend  for  their  invalidity,  and  would  proceed  before  all 
•ompetent  jurisdictions  to  have  such  Invalidity  adjudged  and  sand  ioned; 
hat.  moreover,  by  the  terms  of  the  aforesaid  notification  made  to  the 
plaintiff  company  by  document  of  Thiellement,  bailiff  of  Paris,  of  the 
26th  of  February,  L902,  M.  Donnadieu  declared  that  he  summoned 
the  administrators  of  the  New  Panama  (anal  Company  to  bring  to  the 
aiowledge  of  the  stockholders  of  the  said  company  in  the  general 
aeeting  convoked  to  deliberate  on  the  project  of  the  cession  of  the 
•anal  to  the  United  States,  his  protestation  and  the  document  above 
mentioned,  served  at  his  request  by  M.  Thiellement,  bailiff  of  Paris, 
m  the  18th  of  February,  1902;  that  by  the  notification  addressed  to 
the  ambassador  of  the  United  States,  M.  Donnadieu  caused,  without 
right,  grave  prejudice  to  the  new  company  by  paralyzing  the  ultimate 
ixercise  of  an  indisputable  right;  that  the  reasons  given  by  M.  Donna- 
iieu  do  not  bear  examination;  in  the  first  place,  M.  Donnadieu.  in  his 
pretended  character  as  creditor  of  the  liquidation  of  the  Universal  Com- 
pany of  the  Panama  Canal,  could  not  allege  the  existence  of  any  legal 
tie  between  him  and  the  New  Panama  (  anal  Company,  w  hich  is  not  his 
lebtor,  of  which  he  is  not  a  bondholder;  that  the  defendant  has  not, 
then,  any  character  authorizing  him  to  invoke  either  the  by-laws  of 
the  New  Panama  Canal  Company  under  the  general  principles  of  law  in 
order  to  interfere  in  the  carrying  on  of  the  company-  and  to  interpose 
himself  between  the  plaintiff  company  and  third  persons  with  w  hom  it 
may  have  occasion  to  carry  on  business,  nor  any  character  authorizing 
brim  to  invoke  the  agreement  which  took  place  between  the  new  company 
ibout  to  be  formed  and  the  liquidation  of  the  Universal  Company  based 
upon  the  indebtedness  of  the  latter  to  him,  except  on  condition  of  estab- 
lishing that  the  liquidation  was  not  (sic)  injuring  the  rights  derived  by 
it  from  this  agreement;  that  the  contrary  was  demonstrated  by  the  agree- 
ment between  the  two  companies,  which  agreement  was  sanctioned 
by  a  judgment  rendered  in  the  chamberof  the  council  of  the  civil  tribunal 
of  the  Seine  the  19th  of  March,  1902,  duly  recorded,  binding  on  him  in 
conformity  with  the  lav/  of  July  1,  1893;  considering,  moroever,  and 
sis  an  additional  point  on  the  merits,  that  the  b}T-laws  of  a  company, 
in  tin1  part  which  determines  the  object  of  the  company,  are  not  and 
.•an  not  be  in  contradiction  to  a  decision  of  the  general  meeting  which 
puts  an  end  by  alienation  to  that  object;  that  by  such  a  decision  the 
general  meeting  did  not  transgress  or  modif}T  the  company  compact; 
that,  on  the  other  hand,  the  contributor  of  property  in  kind  to  a  com- 
pany about  to  be  formed,  the  author  of  stipulations  relative  to  that 
contribution,  remained  the  sole  judge  of  the  consequences  which  the 
alienation  by  the  company  of  the  property  contributed  might  cany 
with  it,  as  affecting  the  original  stipulations;  that,  in  the  present  case, 
the  consent  of  the  liquidator  of  the  Universal  Company  having  been 
obtained  and  approved  by  judgment,  which  gave  him  power  as  has 
been  said  above,  no  one  of  those  interested  in  whatever  way  in  the  said 
liquidation  could  be  admitted  to  criticise  or  contradict  that  assent, 
except  under  the  conditions  and  within  the  time  and  according  to  the 
forms  provided  by  the  law  of  the  1st  of  July.  1893;  that  M.  Donnadieu, 
in  contempt  of  those  provisions,  had  committed  an  act  of  unjust i liable 
aggression  against  the  new  company  by  the  notification  of  the  26th  of 
February,  1902,  to  the  ambassador  of  the  United  States;  that  this 
proceeding  was  purely  vexatious;  that  it  had  caused  and  would 
cause  hereafter  a  very  grave  prejudice  to  the  company;  that  this 


78 


PANAMA   CANAL  TITLE. 


aggression  should  be  severely  condemned  and  reparation  ordered 
commensurate  with  the  injury.  Done  by  document  of  Viequetj 
bailiff  at  Paris,  dated  the  25th  of  April,  L902,  duly  recorded,  notify 
ing  to  M.  Emanuel  Donnadieu,  proprietor  above  named,  and  summonJ 
ing  him  to  appear  within  eight  full  days  and  the  additional  time 
allowed  for  distance,  and  by  the  instrumentality  of  the  solicitor  con- 
stituted before  the  president  and  the  judges  composing  the  civil  tribu- 
nal of  the  Seine  sitting  in  the  palace  of  justice  at  Paris,  at  11  o'clock 
of  the  morning,  for  the  reasons  above4  stated  [asks  the  tribunal]: 
to  have  it  declared  and  adjudged  that  M.  Donnadieu  was  without 
character  authorizing  him  to  serve  the  Government  of  the  United 
States  in  the  person  of  its  ambassador  at  Paris  with  the  document  of 
the  26th  of  February.  1902;  to  have  it  declared  and  adjudged  in  addi- 
tion that  M.  Donnadieu  was  without  just  grounds  for  the  said  act:  to 
have  a  release,  purely  and  simply,  as  far  as  may  be  necessary,  from 
the  prohibitions  contained  in  the  said  document  as  well  as  in  two  other 
documents  served  upon  the  New  Panama  ('anal  Company,  one  dated 
the  18th  and  the  other  the  20th  of  February.  1902;  to  declare  them 
null  and  void  and  of  no  effect;  to  have  M.  Donnadieu  condemned  to 
make  reparation  for  the  injury  done,  upon  a  statement  of  the  damages 
to  be  hereafter  furnished:  to  have  him  condemned  to  the  payment  of 
10,000  francs  provisionally;  to  have  M.  Donnadieu  condemned  in  all 
the  costs.  On  this  summons,  which  contains  the  constitution  of  Me. 
Dubourg  as  solicitor  of  the  plaintiff  company.  Me.  Caillet,  solicitor, 
was  constituted  for  M.  Donnadieu  by  act  done  at  the  palace  on  the  3d 
of  May,  1902.  By  instrumentality  of  Me.  Dubourg.  a  record  was 
drawn  up  and  the  cause  inscribed  on  the  general  roll  of  the  clerk's 
office,  w  as  distributed  to  this  chamber,  before  which  Me.  Dubourg  gave 
notice  to  Me.  Caillet.  solicitor  of  M.  Donnadieu,  by  a  document  of 
the  palace,  dated  the  19th  June.  P,M)2,  for  the  audience  of  Wednesday, 
11th  of  June,  1902.  At  this  audience  Me.  Caillet  submitted  a  brief 
as  to  the  exceptions  taken  and  afterwards  a  brief  on  the  merits,  where- 
upon the  matter  was  placed  on  the  roll  of  this  chamber. 

III.  The  joining  of  the  causes  and  the  intervention  of  M.  Lemarquis 
as  mandataire. 

Me.  Caillet,  solicitor  of  M.  Donnadieu,  not  following  up  the  tierce 
opposition,  M.  De  Bieville,  by  document  of  the  palace  dated  7th  of 
June,  19Q2,  served  upon  Me.  Caillet  and  Dubourg  a  brief  asking  that 
it  might  please  the  tribunal: 

Considering  that  the  judgment  rendered  in  the  first  chamber  of  the 
civil  tribunal  of  the  Seine  the  19th  of  March.  1902,  approved,  as  far 
as  concerned  the  liquidation  of  the  Universal  Company  of  the  Inter- 
oceanic  Canal,  of  Panama,  the  offer  made  by  the  new  company,  with 
the  assent  of  the  liquidator,  to  the  Government  of  the  United  States 
of  America  to  cede  to  the  said  Government  all  the  properties  and 
rights  belonging  to  the  new  company  on  the  Isthmus  of  Panama,  as 
well  as  the  plans  and  archives  at  Paris,  for  the  price  of  $40,000,00| 
(205,000,000  francs  or  thereabouts),  the  said  offer  to  remain  good 
up  to  the  -1th  of  March,  1903,  the  ultimate  price  of  the  cession  to  be 
divided  conformably  to  the  decision  of  the  arbitrators  and  with  the 
reservation  of  alterations  to  be  obtained  from  the  Government  of 
the  Republic  of  Colombia  so  far  as  concerns  articles  21  and  22  of  the 
contract  of  concession;  considering  that  this  judgment  was  published 
conformably  to  the  law  of  the  1st  July,  1893;  considering  that  M. 
Emmanuel  Donnadieu,  calling  himself  a  creditor  of  the  new  company 


PANAMA   CANAL  TITLE. 


79 


of  the  Interoceanic  (  anal  of  Panama,  entered  tierce  opposition  to 
the  judgment;  that  he  asked  of  the  tribunal  to  declare  formally  thai 
the  offer  made  by  the  new  company  to  the  Government  of  the  Tinted 
States  was  not  susceptible  of  approval  according  to  the  terms  of 
article  1<>  of  the  law  of  July  1.  L893;  that  he  asked,  additionally, 
n  declaration  of  the  invalidity  of  the  ultimate  cession  of  the  canal 
by  the  new  company  as  beyond  the  powers  of  that  company  and 
made  in  violation  of  the  by-laws  of  the  new  company,  of  the  rights 
which  belong  to  the  Liquidator;  that,  consequently,  he  demanded 
of  the  tribunal  to  set  aside  purely  and  simply  the  judgment  of 
the  19th  March.  1902,  attacked  by  tierce  opposition;  but.  considering 
that  M.  Donnadieu  was  a  creditor  of  the  liquidation  of  the  Universal 
Company  of  the  Interoceanic  Canal  of  Panama  in  the  character  of  a 
Subscriber  to  or  holder  of  bonds;  considering  that  the  right  to  enter 
tierce  opposition  to  the  judgment  rendered  in  conformity  with  article 
10  of  the  law  of  July  1,  1893,  did  not  belong  to  him;  that  article  10 
of  the  said  law  provided  that  every  judgment  of  approval  should  be 
published,  and  that  it  could  be  attacked  by  tierce  opposition  within  a 
month  from  the  publication,  by  the  stockholders,  by  the  mandataire  of 
the  bondholders,  and  by  the  other  company  creditors;  that  thus  the 
holders  of  the  bonds  were  excluded  from  the  right  of  entering  tierce 
opposition;  that  this  is  reserved  in  the  general  interest  to  their  man- 
dataire; considering  that  M.  Lemarquis,  acting*  under  responsibility 
md  under  the  control  of  the  tribunal,  has  entered  no  tierce  opposition 
to  the  judgment  of  the  19th  of  March,  1902;  that  under  these  circum- 
stances tierce  opposition  was  closed  to  the  bondholders  represented  by 
their  mandataire;  considering  that,  on  the  other  hand,  no  other  tierce 
opposition  was  entered  to  the  said  judgment  cither  on  the  part  of  the 
stockholders  or  on  the  part  of  the  company's  creditors;  that,  under  these 
circumstances  the  judgment  of  the  19th  of  March,  1902,  regularly 
published,  became  definitive;  for  these  reasons  [asks  the  tribunal]  to 
declare  M.  Donnadieu,  in  his  character  of  subscriber  to  or  holder  of 
bonds  of  the  Universal  Company  of  the  Interoceanic  Canal  of  Panama, 
inadmissible  to  make  tierce  opposition  to  the  judgment  of  the  19th  of 
March,  1902,  and  to  condemn  him  to  the  costs,  out  of  which  to  be 
plowed  the  fees  of  Me.  De  Bieville,  solicitor. 

By  the  instrumentality  of  Me.  de  Bieville  this  brief  was  submitted, 
ind,  after  being  noted  at  the  clerk's  office,  was  deposited  in  this  cham- 
ber, before  which  Me.  de  Bieville  gave  notice  to  Me,  Caillet,  by  docu- 
ment of  the  palace  dated  the  11th  June,  1902,  for  the  audience  of 
Wednesday,  the  18th  of  June.  At  that  audience  Me.  Caillet  submitted 
i  brief  on  the  exceptions  and  a  brief  on  the  merits,  whereupon  the 
matter  was  put  on  the  roll  of  the  chamber.  By  document  of  the 
palace  of  the  23d  of  June,  1902.  Master  Caillet  served  on  Me.  de 
Bieville,  solicitor,  a  brief  asking  that  it  might  please  the  tribunal: 

Considering  that  the  liquidator  of  the  company  of  the  Interoceanic 
Canal  of  Panama  only  opposed  the  tierce  opposition  entered  by  M. 
Donnadieu  to  the  judgment  of  approval  of  the  19th  March,  1902,  by 
in  objection  of  inadmissibility;  that  he  claimed  that  M.  Donnadieu  was 
i  bondholder  and  had  not,  in  that  character,  the  right  to  enter  tierce 
opposition;  that  the  exercise  of  this  right  and  of  all  others  belonged  only 
to  the  mandataire  whom  the  law  imposed  upon  the  holders  of  bonds; 
that  he  added  that  M.  Lemarquis  not  having  made  use  of  the  right  of 
tierce  opposition,  the  judgment  of  the  19th  March,  1902,  became  detini- 


80 


PANAMA   CANAL  TITLE. 


tive;  but,  considering  thatM.  Gautron,  as  Liquidator,  commits,  in  these, 
propositions,  the  double  error  of  fact  and  of  law;  considering,  as  a 
matter  of  fact,  that  M.  Donnadieu  was  not  a  bondholder;  that  by  judg- 
ment of  the  civil  tribunal  of  the  Seine  of  the  25th  of  January.  1893, 
confirmed  by  the  decree  of  the  court  of  Paris  of  the  20th  of  June, 
1893,  the  contract  of  loan  as  between  M.  Donnadieu,  of  the  Panama 
Canal  Company,  had  been  rescinded  as  against  the  borrowing-  company, 
which  had  been  condemned  to  the  reimbursement  of  the  sums  due  from 
it  in  consequence  of  that  rescission;  that  M.  Donnadieu  was  not,  there- 
fore, a  holder  of  bonds,  voided  representatives  of  a  canceled  contract, 
but  a  creditor  by  virtue  of  the  judgment  and  decree  above  referred  to; 
that  he  has.  then,  remained  master  of  his  rights  and  was  not  repre- 
sented as  to  the  exercise  of  them  by  a  legal  mandataire  of  the  holders 
of  bonds;  that,  moreover,  even  had  M.  Donnadieu  remained  a  holder 
of  bonds  (which  he  has  not),  he  would  not  less  have  the  right  to  enter 
tierce  opposition:  that  the  law  of  July  1,  L893,  article  2,  provides  that 
every  bondholder  shall  have  the  right  to  institute  individually  and  at 
his  risks  and  perils  any  suit  which  the  mandataire  shall  have  refused 
or  neglected  to  institute  within  a  month  following  the  notification  to 
him  to  proceed;  that  by  document  of  the  19th  of  February,  1902, 
M.  Donnadieu,  after  having  notified  M.  Lemarquis  of  the  prohibition 
which  he  had  caused  to  be  served  upon  the  New  Panama  Canal  Company 
against  selling  the  canal  and  its  concession,  had  summoned  the  said 
Lemarquis  to  take  all  useful  measures  to  prevent  the  consummation 
of  the  projected  sale,  declaring  to  him  that,  in  default  of  his  opposing 
the  proposed  sale  and  even  in  concurrence  with  him,  M.  Donnadieu  in- 
tended, by  all  legal  means,  by  all  useful  proceedings,  to  oppose  the  said 
sale;  that,  consequently,  and  even  if  (which  Is  not  so)  M.  Donnadieu 
was  represented  by  M.  Lemarquis,  he  would  have  the  right  to  make 
use,  in  default  of  his  having  done  so  after  being  notified  to  proceed, 
of  the  right  of  action  contemplated  and  provided  for  by  the  law  of 
July  1,  1893.  in  the  case  provided  for  by  articles  10  and  11  of  the 
said  law.  and  which,  in  the  present  instance,  tended  to  prevent  the 
projected  sale  of  the  canal  to  the  United  States  of  North  America; 
that,  consequently,  the  tierce  opposition  of  M.  Donnadieu,  from  what- 
ever point  of  view  regarded,  was  admissible;  that  the  objection  of 
inadmissibility  made  by  the  liquidator  should  be  rejected;  consider- 
ing that  the  judgment  of  approval  of  the  19th  of  March,  1902,  to 
which  tierce  opposition  was  made,  was  rendered  upon  the  considera- 
tion of  the  decision  of  the  arbitrators  which  fixed  the  maimer  of 
division  of  the  price  of  the  canal,  a  decision  which  the  judgment  con- 
templates in  its  disposing  part;  considering  that  this  decision  should 
be  turned  over  to  the  discussions  upon  th  tierce  opposition,  for 
the  reason  that  it  was  communicated  to  the  tribunal  in  support  of 
the  request  for  approval;  that  it  presented,  moreover,  a  capital  point 
of  interest  with  regard  to  the  decision  to  be  arrived  at,  the  interest  of 
the  creditors  to  accept  or  reject  the  proposed  cession  depending  in 
great  part  on  the  profit  which  might  result  for  them  and  especially  on 
the  proportion  of  the  price  which  would  be  reserved  to  them;  consid- 
ering, however,  that,  notwithstanding  all  friendly  efforts  and  especially 
a  summons  dated  the  20th  of  June,  1902,  M.  Gautron,  as  liquidator, 
refused  to  communicate  to  M.  Donnadieu  that  decision  of  the  arbitra- 
tors; that  he  should  have  been  compelled  to  make  that  indispensable 


PANAMA   CANAL  T1TLK. 


communication;  for  those  reasons  [asks  the  tribunal]  to  declare  Gau- 
fcron  as  Liquidator  without  just  grounds  for  his  point  of  inadmissibility; 
to  declare  the  tierce  opposition  admissible,  and.  before  proceeding  to 
the  merits,  to  declare  that  upon  the  day  for  the  judgment  to  be  ren- 
dered Gautron  as  liquidator  shall  be  bound  to  communicate  to  M.  Don- 
nadieu  in  due  form  the  decision  of  the  arbitrators  adduced  by  him  in 
Support  of  his  request  for  approval  and  considered  in  the  disposing 
part  of  the  judgment  of  the  19th  March,  1902,  to  which  the  tierce 
opposition  has  been  made,  on  pain  of  500  francs  per  day  for  delay, 
after  which  a  decision  to  be  rendered;  to  declare  that,  until  such  com- 
munication shall  have  been  made,  a  hearing  should  be  refused  to  said 
Gautron  as  liquidator;  and  to  condemn  him  in  the  costs  of  that  inci- 
dental proceeding,  with  the  fees  of  Me.  Caillet,  solicitor.  By  docu- 
ment ot  the  palace  of  justice  dated  the  25th  June,  1902,  Me.  Caillet 
served  on  Me.  Dubourg,  solicitor,  a  brief  asking  that  it  might  please 
the  tribunal: 

Considering  that  the  New  Panama  Canal  Company  desired  to  have 
it  adjudged  that  M.  Donnadieu  was,  first,  without  character  or  stand- 
ing; second,  without  legal  right  to  make  opposition  to  the  sale  of  the 
canal  to  the  United  States;  that  it  contends  that  the  notifications,  pro- 
tests, and  prohibitions  made  on  his  request  constituted  acts  of  unjusti- 
fiable vexatious  aggression,  that  had  caused  an  injury  for  which  it 
demanded  reparation;  considering  that  M.  Donnadieu  acted  in  virtue 
at  once  of  his  right  which  was  personal  to  him,  and  by  way  of  exer- 
cising the  rights  of  the  liquidation  of  the  Universal  Company,  his 
debtor. 

Sec.  I.  Considering  that  the  by-laws  of  anonymous  companies  were 
not  made  merely  to  regulate  the  rules  of  the  associates  among  them- 
selves; that  they  are  also  the  law  of  the  company  with  regard  to  third 
persons;  that  the  publicity  required  for  by-laws  has  no  other  raison 
d'etre;  considering  that,  on  the  other  hand,  anonymous  companies, 
associations  of  capitals,  excluding  all  notion  of  persons,  have  no  active 
life  or  power  except  within  the  limits  and  within  the  objects  which  the 
by-laws  creating  them  determine;  that  outside  of  those  limits  an  anony- 
mous company  has  no  existence  or  power,  and  the  acts  which  it  con- 
cludes are  radically  void;  that  this  voidness  is  absolute  and  can  be 
invoked  by  anyone  interested  who  has  the  character  or  standing  to  do 
this  by  the  mere  fact  of  his  interest;  that  Donnadieu  had.  consequently, 
the  character  to  ask  to  have  pronounced  the  invalidity  of  the  sale  of 
the  canal  consented  to  by  the  new  company,  because  that  sale  deprived 
him  of  (30  per  cent  of  the  profits  of  carrying  on  that  canal  reserved  to 
the  creditors  of  the  Universal  Company;  that  he  had  a  character  to 
protest  against  the  project  of  such  a  cession,  to  oppose  its  realization; 
considering  that  the  new  company  recognized  that,  in  principle,  Don- 
nadieu was  admissible  to  make  use  on  behalf  of  the  universal  Com- 
pany, his  debtor,  of  the  right  of  action  which  the  latter  derived  from 
its  contribution,  but  that  it  contended  that,  in  fact,  he  was  not  in  a 
position  to  make  use  of  it,  the  liquidator  having  made  use  of  that  right 
of  action  in  consenting  to  the  cession  of  the  canal;  but  considering  that 
Gautron  as  liquidator,  far  from  having  made  use  of  the  rights  given 
him  b}T  the  stipulations  concerning  his  contributions,  had.  on  the  con- 
trary, abandoned  them  in  consenting  to  the  cession  of  the  canal;  that, 
consequently,  Donnadieu  was  undoubtedly  admissible  to  exercise  the 

8751—02  6 


82 

• 


PANAMA  CANAL  TITLE. 


neglected  rights;  considering  that  it  remains  to  be  shown  that  Donna* 
dieu  had  just  grounds  for  instituting  his  two  proceedings. 

Sec.  II.  Considering  that  the  new  company  recognized  that  its  object 
was  to  carry  on  and  not  to  sell  the  canal,  but  that  it  contended  that  it 
had  nevertheless  the  right  to  sell  because  the  sale  put  an  end  to  the 
object  of  the  company,  and  therefore  did  not  entail  any  modification 
of  that  object;  but  considering  that  this  is  a  mere  juggling  with  word-; 
that  the  company  had  power  and  capacity  only  to  carry  out  its  object; 
that  is  to  say,  to  construct  and  carry  on  the  canal;  that  it  had  none  to 
take  a  profit  out  of  selling  it;  that  the  sale  was  possible  only  after  a 
regular  dissolution  of  the  company,  by  an  act  of  liquidation  and  in 
realization  of  the  assets,  but  that  the  stipulations  concerning  the  con- 
ditions of  the  contribution  of  the  canal  had  not  permitted,  and  did  not 
permit,  the  company  to  dissolve  itself  and  to  abandon,  in  the  actual 
state  of  affairs,  the  construction  of  the  canal,  to  the  detriment  of  the 
contributor  and  of  those  in  privity  with  him;  that  the  sale  was,  there- 
fore, impossible  and  did  not  come  within  the  powers  of  administration 
and  of  disposition  belonging  to  the  company  life. 

Sec.  III.  Considering  that,  in  violating  the  stipulations  concerning 
the  contribution  of  the  canal,  and  injuring  the  rights  of  the  contributor 
and  of  his  creditors,  which  the  new  company  does  not  even  attempt  to 
deny  or  to  explain  away,  it  seeks  only  to  take  refuge  behind  the 
exception  of  inadmissibility  drawn  from  the  judgment  of  approval  of 
the  19th  of  March,  1902,  and  from  the  law  of  duly  J.  1893;  but  con- 
sidering that  the  judgment  of  the  19th  of  March,  L902,  was  rendered 
only  after  the  notifications  which  arc1  here  criticised  of  the  18th,  19th9 
and  26th  of  February,  VM)2;  that  it  could  not  then  diminish  or  sup- 
press the  rights  which  M.  Donnadieu  had  to  make  those  notifications 
considering,  on  the  other  hand,  that  the  approval  contemplated  by  the 
law  of  July  1,  1893,  providing  solely  for  the  case  of  a  cession  consented 
to  by  the  liquidator  of  the  whole  or  a  part  of  the  assets  of  the  liquida- 
tion, can  not  govern  a  contract  which  is  only  to  take  place  between  the 
United  States  and  the  new  company,  nor  allow  to  the  latter  or  the 
liquidation,  with  which  there  was  no  contract  of  alienation  of  assets, 
advantages  made  for  the  benefit  of  its  creditors;  that  Donnadieu  who 
had,  besides,  attacked  the  judgment  of  the  19th  of  March,  1902, 
by  tierce  opposition  had  therefore  just  grounds  to  make  use  of  the 
right  of  action  which  the  liquidator  deserted  and  to  attack  at  need,  by 
virtue  of  article  1167  of  the  Civil  Code,  the  gratuitous  abandonment 
consented  to  by  the  liquidator  of  the  advantages  which  constitute  almost 
the  only  important  assets  coming  to  the  creditors.  For  these  reasons 
[asks  the  tribunal]  to  declare  that  in  making  the  notifications  which 
have  been  criticised  M.  Donnadieu  was  only  making  use  of  his  rights; 
to  declare  that  M.  Donnadieu  was  personally  admissible  to  take  advan- 
tage  of  the  lack  of  power  in  the  new  company  to  cede  the  canal;  to 
declare  that  M.  Donnadieu  was  admissible,  by  the  terms  of  article  1166 
of  the  Civil  Code,  to  make  use  of  the  rights  neglected  by  the  liqui- 
dator, his  debtor;  to  declare  that  he  is  also  admissible  to  attack,  by 
virtue  of  article  1167  of  the  same  code,  the  abandonment  of  his  rights, 
by  his  debtor;  consequently  to  declare  that  the  new  company,  consti- 
tuted to  construct  and  carry  on  the  canal  is  without  power  to  dispose 
of  it  by  alienation;  to  declare,  consequently,  null  and  void  the  offer  of 
cession  proposed  to  the  United  States  of  North  America;  to  declare 
that  the  new  company  is  without  right  to  free  itself  from  the  price 


PANAMA   (  ANAL  TITLE. 


83 


due  from  it  by  reason  of  the  contribution  of  the  canal  by  selling  the 
canal  to  a  third  person  who  would  obtain  all  the  benefits  of  it;  to 
declare,  from  this  new  point  of  view,  the  offer  of  cession  of  the  canal 
null  and  void;  to  reject  all  the  requests,  points  and  arguments  of  the 
new  company,  and  to  condemn  it  in  all  the  costs,  allowance  therefrom 
to  be  made  of  the  fees  of  Me.  Caillet,  solicitor.  By  document  of  the 
Palace  of  the  25th  of  June,  1902,  Me.  Charneau  served  on  Me.  Caillet 
and  Me.  IV  Bieville  a  brief  as  to  intervention,  in  which  he  constituted 
himself  as  representative  of  M.  Lemarquis,  mandataire,  and  asking 
that  it  should  please  the  tribunal: 

Considering  that  Lemarquis,  as  mandataire  of  the  Panama  bond- 
holder.^, properly  intervenes  in  the  pending  case  between  M.  Grautron 
a>  Liquidator  and  M.  Donnadieu;  considering  that  the  cession  proposed 
to  the  United  States  of  North  America,  to  which  M.  Grautron  has  con- 
sented, is  favorable  to  the  interests  of  the  bondholders,  for  these  reasons 
[asks  the  tribunal]  to  admit  M.  ( !harneau  as  solicitor  for  M.  Lemarquis 
as  mandataire;  to  admit  M.  Lemarquis*  intervention  in  joining  in  vjith 
the  conclusions  submitted  hy  the  liquidator  and  in  approving  full '//  the 
understanding  entered  into  hrtu-een  the  liquidator  and  tin-  Xeu*  Panama 
Company  with  the  ohjeet  of  making  (I  erssion  of  tin    enterprise  to  the 

doe,  rni  m  nt  of  North  America  for  the  sum  of  $43,000,000,  and  to  allow 
the  costs  of  suit  as  may  I >e  proper. 

By  document  of  the  Palace  dated  June  28,  1902,  M.  Caillet  served 
on  MM.  C  harneau  and  de  Bieville  a  brief,  asking  that  it  might  please 
the  tribunal : 

As  to  the  intervention  of  M.  Lemarquis,  considering  that  M.  Lemar- 
quis justifies  his  intervention  upon  this  single  ground,  quoting  his  own 
words.  "  Considering  that  the  proposed  sale  to  the  American  Govern- 
ment, to  which  M.  Grautron  has  assented,  is  favorable  to  the  interests 
of  the  bondholders;"  considering  that  the  tribunal,  in  order  to  decide 
concerning  the  admissibility  of  this  intervention,  ought  to  examine  the 
interests  on  which  is  founded  the  intervention;  that  in  this  case  that 
interest,  as  M.  Lemarquis  says,  proceeds  from  the  advantage  of  the 
proposed  cession;  that  the  tribunal  then  finds  itself  forcibly  called  upon 
to  examine  if  the  proposed  cession  is  or  not  favorable  to  the  bond- 
holders and  all  other  creditors,  such  as  M.  Donnadieu:  that  this  exam- 
ination requires  the  production  of  the  papers  concerning  the  said 
cession,  and  consequently  the  communication  to  the  parties  in 
papers  which  the  tribunal  saw  before  rendering  the  judgment  of 
approval  of  the  19th  of  March,  1902;  papers  with  which  M.  Lemar- 
<iui-  was.  of  course,  acquainted,  but  the  communication  of  which 
to  M.  Donnadieu  was  refused.  For  these  reasons  before  reaching  a 
decision,  either  with  regard  to  the  admissibility,  or  on  the  merits,  of 
the  intervention  of  M.  Lemarquis  [asks  the  tribunal]  to  declare  that 
the  papers  concerning  the  proposed  cession  of  the  canal  and  the 
approval  given  by  Messrs.  Grautron  and  Lemarquis  to  that  cession, 
especially  the  arbitration  decision  considered  in  the  disposing  part  of 
the  judgment  of  March  19,  1902,  shall  be  in  legal  form  communicated 
to  M.  Donnadieu,  and  this  on  pain  as  against  Messrs.  Grautron  and 
Lemarquis  of  constraint  by  a  fine  of  500  francs  per  day  of  delay,  dur- 
ing a  month,  after  which  judgment  to  be  rendered;  and  to  condemn 
them  in  solido  to  the  costs,  allowing  therefrom  the  fees  of  Me.  Caillet, 
solicitor.  After  several  postponements  the  cause  has  come  on  to  be 
heard  at  the  session  of  this  day.    At  this  audience  the  advocates  of  the 


84 


PANAMA  CANAL  TITLE. 


parties,  assisted  by  their  solicitors,  have  presented  themselves  at  the 
bar,  have  restated  and  enlarged  upon  the  points  previously  submit  ted 
by  them,  and  have  asked  judgment  for  their  respective  clients.  The 
public  attorney  has  been  heard  as  to  his  views.  In  this  state  of  the 
matter,  the  cause  presents  for  adjudication  the  following  questions: 

POINTS  OF  LAW. 
AS  TO  THE  TIERCE  OPPOSITION. 

Should  the  tribunal  admit  M.  Donnadieu  as  tiers  opposant  to  the 
judgment  of  the  19th  of  March,  1902?  Doing  so,  should  it  declare 
formally  that  the  offer  made  by  the  new  company  to  the  Government 
of  the  United  States  of  America  was  not  susceptible  of  approval  under 
the  terms  of  article  10,  of  the  law  of  July  1,  1893? 

As  a  subsidiary  matter,  on  the  merits,  should  it  declare  that  the  ulti- 
mate cession  by  the  new  company  is  beyond  the  powers  of  that  com- 
pany; declare  that  the  cession  offered  violates  the  by-laws  of  the  new 
company  and  the  rights  belonging  to  the  liquidation 3  Should  it 
declare  that  the  liquidator  had  not  been  and  was  not  able  to  make  use 
of  a  proceeding  tending  to  secure  respect  for  his  rights  before  any 
other  tribunal  than  the  civil  tribunal  of  the  Seine,  and  especially  before 
an  arbitration  tribunal?  Should  it  declare  that  the  cession  offered  was 
contrary  to  the  rights  and  to  the  interests  of  the  creditors  of  the  liqui- 
dation of  the  Universal  Company  of  the  Interoceanic  Canal  of  Panama? 

Should  it  sa}T,  consequently,  that  there  was  no  warrant,  either  as  to 
form  or  on  the  merits,  for  the  approval  asked  by  Gautron  as  adminis- 
trator so  far  as  concerns  the  liquidation  of  the  said  Universal  Company 
of  the  offer  made  by  the  Universal  Company  of  the  Panama  Canal, 
with  his  consent,  to  the  Government  of  the  United  States  of  America, 
of  all  its  propertv  and  rights  on  the  Isthmus  of  Panama,  as  well  as  the 
plans  and  archives  at  Paris,  at  the  price  of  $40,000,000? 

Should  it,  consequently,  set  aside  purely  and  simply  the  judgment 
of  the  19th  of  March,  1902,  to  which  tierce  opposition  was  made? 

Should  it,  on  the  contrary,  declare  Donnadieu,  in  his  character  of 
subscriber  to  or  holder  of  bonds  of  the  Universal  Companv  of  the 
Interoceanic  Canal  of  Panama,  inadmissible  to  make  tierce  opposition 
to  the  judgment  of  March  19,  1902? 

As  to  the  demand  for  release  from  prohibitions  to  the  sale  of  the 
Panama  Canal,  should  the  tribunal  declare  and  adjudge  that  M.  Donna- 
dieu was  without  character  or  standing  to  serve  on  the  Government  of 
the  United  States,  in  the  person  of  its  ambassador  at  Paris,  the  docu- 
ments of  the  26th  of  February  (sic),  1902? 

Should  it  declare  and  adjudge,  additionally,  that  M.  Donnadieu  was 
unfounded  in  the  legal  grounds  alleged  for  that  act? 

Should  it  order  a  release,  pure  and  simple,  so  far  as  necessai^y,  from 
the  prohibitions  contained  in  the  said  document  and  in  two  others 
served  upon  the  New  Panama  Canal  Company,  one  dated  the  18th  and 
the  other  the  26th  of  February,  1902? 

Should  it  declare  them  null  and  of  no  effect?  Should  it  condemn 
M.  Donnadieu  to  repair  the  injury  caused,  upon  a  statement  of  the 
damages  to  be  afterwards  furnished? 

Should  it  condemn  him  to  the  payment  of  10,000  francs  provi- 
sionally ? 


PANAMA   CANAL  TITLE. 


85 


Should  it,  on  the  contrary,  declare  the  Ne  w  Panama  Canal  Company 
inadmissible  and  unfounded  in  its  demand,  and  reject  il  \ 

As  to  the  intervention  of  M.  Lemarquis  as  ma'ndataire:  Should  it 
pronounce  admissible  that  intervention  as  to  his  joining  in  the  request 
of  the  liquidator,  as  to  his  approving  in  all  respects  the  arrangement 
between  the  liquidator  and  the  New  Panama  Canal  Company  with  a 
view  to  the  cession  to  the  Government  of  the  United  States  for  the 
sum  of  $40,000,000? 

Should  it,  on  the  contrary,  before  proceeding'  to  judgment  as  to 
the  admissibility  or  merits  of  the  intervention  of  M.  Lemarquis, 
declare  that  the  papers  concerning  the  proposed  cession  of  the  canal 
and  the  approval  given  by  Messrs.  Gautron  and  Lemarquis  to  that 
affair,  especially  the  award  of  the  arbitrators,  considered  in  the  dispos- 
ing part  of  the  judgment  of  March  19,  1902,  shall  be,  in  legal  form, 
communicated  to  M.  Donnadieu,  and  this  on  pain  as  against  Messrs. 
Gautron  and  Lemarquis  in  solidoof  500  francs  per. day  of  delay  during 
a  month,  after  which  judgment  to  be  rendered?  What  as  to  costs? 
Record  of  the  case  as  drawn  up  and  signed  by  Do  BieVille. 

The  tribunal  having  heard,  as  to  their  points  and  arguments,  Gontard, 
advocate,  assisted  by  Dubourg,  solicitor,  of  the  New  Panama  Canal 
Company,  acting  through  its  president  and  the  members  of  the  coun- 
cil of  administration;  Derche,  advocate,  assisted  by  Caillet,  solicitor 
of  Emmanuel  Donnadieu;  Henri  Thieblin,  advocate,  assisted  by  De 
Bieville,  solicitor  of  Gautron,  as  liquidator;  Charneau,  solicitor  of 
Lemarquis  as  mandataire;  the  public  attorney  having  been  heard,  and 
after  having  deliberated  according  to  law,  judging  in  ordinary  matter 
and  in  first  resort,  the  causes  being  united  on  account  of  the  connec- 
tion between  them,  and  pronouncing  by  one  and  the  same  judgment: 

1.  As  to  the  intervention  of  Lemarquis. — Considering  that  Lemar- 
quis, mandataire  of  the  bondholders  of  the  Panama  Canal,  is  admissible 
to  intervene  in  the  present  proceeding  according  to  the  terms  of  article 
11  of  the  law  of  July  1,  1893. 

2.  A  s  to  the  tierce  opposition  of  Donnadieu  to  the  judgment  of  th  is 
chamber  of  March  19, 190°2. — Considering  that  by  the  terms  of  articles 
10  and  11  of  the  law  of  July  1,  1893,  a  judgment  of  approval,  such  as 
that  of  March  19,  1902,  can  be  attacked  by  tierce  opposition  only  by 
the  persons  enumerated  in  the  latter  of  the  said  articles;  that  is  to  say, 
by  the  stockholders  of  the  Universal  Company  of  the  Panama  Canal, 
by  the  mandataire  of  the  bondholders,  and  by  the  other  company  cred- 
itors of  the  same  company,  whence  it  follows  that  the  bondholders  are 
not  admissible  to  make  tierce  opposition  to  the  said  judgment;  that  this 
inadmissibility  results  at  the  same  time  from  the  text  of  article  11,  above 
mentioned,  and  from  considering  together  that  article  and  article  2, 
paragraph  1;  that,  on  one  hand,  by  the  terms  of  article  11,  tierce  oppo- 
sition is  to  be  put  in  within  not  to  exceed  a  month  from  the  publication 
of  the  judgment,  and,  on  the  other  hand,  article  2,  paragraph  4,  only 
permits  to  the  bondholder  who  wishes  to  sue  individually,  where  the 
mandataire  of  the  bondholders  may  have  refused  or  neglected  to  sue, 
to  begin  his  action  within  the  month  which  shall  follow  the  notifica- 
tion to  sue  addressed  to  the  mandataire  by  the  bondholder;  that  the 
irreconcilability  of  these  two  periods  allowed  demonstrates  that  the 
law  of  July  1,  1893,  did  not  give  the  right  of  tierce  opposition  to 
the  bondholders  of  the  Universal  Company  of  the  Panama  Canal. 
Considering  that  Donnadieu  is  nothing  else  than  a  bondholder,  not- 


80 


PANAMA  CANAL  TITLE. 


withstanding  his  denials;  considering  that  he  acted  in  the  proceeding 
which  terminated  in  a  judgment  of  this  tribunal  of  January  26,  L893, 
confirmed  on  appeal  by  decree  of  June  29,  1893,  as  holder  of:  First, 
241  bonds  of  the  Panama  Canal  Company,  5  percent,  issued  in  L882,  at 
437.50  francs,  producing  an  annual  interest  of  25  francs  and  payable  in 
seventy-five  years,  at  500  francs;  secondly,  10  bonds  of  the  same  com- 
pany, called  3  per  cent,  issued  in  1883,  at  285  francs,  producing  an 
annual  interest  of  15  francs,  and  payable  at  500  francs;  thirdly,  15 
bonds,  6  per  cent.  Grst  series,  issued  in  1886,  at  450  francs,  producing 
an  annual  interest  of  30  francs,  and  payable  in  forty-two  years  at 
1,000,  by  way  of  drawing  by  lot.  And  that,  by  the  terms  of  said 
judgment  and  decree,  Donnadieu  obtained  judgment  against  the  liqui- 
dator for  the  sums  hereinafter  stated,  being  the  amounts  of  the  bonds 
of  which  he  was  and  is  yet  to-day  the  holder,  to  wit: 

First,  105,437  francs  50  centimes,  the  amount  of  241  bonds;  secondly, 
629  francs  1  centime,  the  amount  of  the  sinking-fund  payment  accrued 
on  them;  thirdly,  the  part  of  the  coupons  unpaid  of  said  bonds,  from 
July  15  to  December  14,  1888;  fourthly,  the  sum  of  2,850  francs, 
the  amount  of  10  3  per  cent  bonds  issued  at  285  francs;  fifthly,  the 
sum  of  149  francs  80  centimes,  the  amount  of  the  sinking-fund  pay- 
ment accrued  on  them;  sixthly,  the  portion  of  the  unpaid  coupons  of 
the  same  bonds  from  October  15  to  December  14,  1888;  seventhly, 
the  sum  of  6,750  francs,  the  amount  of  15  6  per  cent  bonds,  first  series, 
at  450  francs  each;  eighthly,  the  sum  of  1,569  francs,  the  amount  of 
the  sinking-fund  payment  accrued  on  them,  calculated  at  104  francs  60 
centimes  each;  ninthly,  the  portion  of  coupons  unpaid  of  the  said  bonds 
from  November  15  to  the  14th  of  December,  1888;  whence  it  follows 
that  very  far  from  there  having  been  a  novation  effected  in  favor  of 
Donnadieu,  and  the  nature  of  his  credit  as  against  the  liquidation  of 
the  Panama  Canal  Company  having  been  changed,  the  judgment 
and  the  decree  aforesaid  did,  on  the  contrary,  settle  and  sanction, 
in  favor  of  Donnadieu,  the  credit  resulting  for  him  from  the  bonds 
of  which  he  was  the  holder  in  such  way  that  he  remains,  since  the 
judicial  decision,  what  he  was  before;  that  is  to  say,  a  holder  of 
bonds  of  the  Panama  Canal  Company,  who  can  act  only  within  the 
limits  and  under  the  conditions  prescribed  by  the  law  of  July  1,  1893; 
considering,  moreover,  that  Donnadieu  so  well  understood  this  that  in 
a  former  suit  brought  by  him  against  the  liquidator  and  the  legal 
mandataire  of  the  bondholders  of  the  Panama  Canal  Company,  a  pro- 
ceeding terminated  by  judgment  of  this  chamber  of  March  17,  1898, 
Donnadieu  presented  himself  and  acted  as  holder  of  Panama  Canal 
bonds,  and  as  a  creditor  of  the  said  Panama  Canal  Company  in  the 
character  of  subscriber  to  the  bonds  above  enumerated;  considering 
that  Donnadieu  is  no  better  grounded  in  invoking,  in  the  said  char- 
acter of  bondholder  of  the  Panama  Canal  Company,  article  2,  para- 
graph 4,  whence  he  claims  to  draw  the  right  to  make  use,  in  his 
individual  name  and  at  his  risks  and  perils,  of  the  present  proceeding 
which  the  mandataire  of  the  bondholders  is  alleged  to  have  neglected 
to  institute  within  the  month  after  the  notification  to  do  so,  which 
Donnadieu  claims  to  have  addressed  to  him  by  documents  by  Thielle- 
ment,  bailiff  at  Paris,  on  February  19,1902;  considering  that  it  results 
from  the  very  text  of  the  points  submitted  by  Donnadieu,  that  b}^  the 
terms  of  said  document  of  February  19,  1902,  Donnadieu,  after  hav- 
ing notified  Lemarquis  of  the  prohibition  which  he  had  the  day  before 


PANAMA  CANAL  TITLE. 


87 


made  to  the  New  Panama  Canal  Company  to  .sell  the  canal  and  con 
cession,  summoned  Lemarquis  to  take  all  useful  means  to  prevent  the 
making  of  the  proposed  sale,  declaring  to  him  that,  in  default  of  his 
(Lemarquis")  opposing  the  proposed  sale  and  even  in  concurrence 
w  ith  him  (Lemarquis),  Donnadieu  intended  to  oppose  it  himself  by  all 
legal  ways  and  all  useful  suits.  Considering  that  the  said  notification 
can  not  he  considered  as  fulfilling  the  requirements  of  article  2,  of  the 
law  of  July  1,  1893,  as  to  tierce  opposition  to  the  judgment  of  March 
19,  I90i?.  since  it  preceded  by  a  month  the  very  judgment  to  which 
Donnadieu  claims  to  make  tierce  opposition,  in  default  of  Lemarquis 
doing  so;  considering,  consequently,  that  the  tierce  opposition  of 
Donnadieu  to  the  judgment  of  March  19,  1902,  is  not,  from  any  point 
of  view,  admissible. 

3.  As  t<>  the  <l<  mand  of  the  New  Panama  Canal  Company  against 
Donnadieu  for  release  from  tierce  opposition  and  for  damages. — Con- 
sidering that  according  to  document  of  Thiellement,  bailiff  at  Paris,  of 
February  18,  1902,  Donnadieu  made  prohibition  to  the  New  Panama 
Canal  Company  to  proceed  to  the  sale  of  the  said  canal,  of  the  conces- 
sion and  its  accessories,  and  that,  on  the  other  hand,  by  another  docu- 
ment of  the  same  bailiff  dated  February  26,  1902,  served  on  the 
ambassador  of  the  United  States,  at  Paris,  as  results  from  the  serving 
upon  the  New  Panama  Canal  Company  of  a  copy  of  the  said  docu- 
ment, Donnadieu  declared  his  opposition  to  the  cession  of  the  canal, 
with  the  declaration  that  if,  notwithstanding  his  protestations,  agree- 
ments concerning  that  cession  should  be  concluded,  he  would  contend 
for  their  invalidity  and  would  proceed  before  all  competent  jurisdic- 
tions to  have  that  invalidity  shown,  adjudged,  and  sanctioned.  Con- 
sidering that  there  exists  no  legal  tic  between  Donnadieu  and  the  New 
Panama  Canal  Company:  considering  that  it  results  from  what  pre- 
cedes that  Donnadieu,  in  his  said  character  of  bondholder  of  the  old 
Panama  Canal  Company,  was  represented  in  all  the  negotiations  of  the 
liquidation  of  the  old  Panama  Canal  Company  with  the  new  company 
by  Lemarquis,  mandataire  of  the  bondholders,  and  that  he  does  not 
even  allege  that  there  was  between  Lemarquis  or  Gautron  and  the 
new  company  any  collusion,  which  alone  would  have  given  Donnadieu 
a  right  of  individual  action  under  article  1167  of  the  Civil  Code;  con- 
sidering, consequently,  that  Donnadieu  served  without  right  and  abu- 
sively, the  notifications  out  of  court  of  February  18,  19,  and  26, 
1902;  considering  that  in  serving  said  documents,  and  especially 
that  upon  the  ambassador  of  the  United  States,  he  committed  a 
wrong  and  caused  the  New  Panama  Canal  Company  an  injury,  for 
which  he  should  make  compensation,  under  article  1382  of  the  Civil 
Code;  considering  that  the  tribunal  has  at  present  the  data  neces- 
sary to  determine  the  extent  of  the  injury  and  to  estimate  the 
amount  due  therefor.  For  these  reasons  it  admits  Lemarquis's  inter- 
vention; declares  Donnadieu's  tierce-opposition  to  the  judgment  of 
March  19,  1902,  inadmissible  and  rejects  it:  declares  that  Donnadieu 
was  without  right  and  without  legal  character  to  serve  the  New  Pan- 
ama Canal  Company  and  the  Government  of  the  United  States  with 
the  aforesaid  documents  of  February  18,  19,  and  26,  1902;  allows,  so 
far  as  necessary,  a  release,  pure,  simple,  complete,  and  definitive  from 
the  prohibitions  contained  in  the  said  documents  of  Thiellement  of 
thelSth,  19th,  and  26th  of  February,  1902;  declares  the  said  prohi- 
bitions void  and  of  no  effect;  condemns  Donnadieu  by  way  of  repara- 


88 


PANAMA   (  ANAL  TITLE. 


tion  for  the  injury  caused  by  him  to  the  New  Panama  Canal  Company 
by  the  abusive  notifications,  hereinbefore  annulled,  to  pay  to  said 
New  Panama  Canal  Company  as  damages  500  francs;  declares  the 
parties,  respectively,  unfounded  in  all  their  other  demands  and  propo- 
sitions and  rejects  them;  condemns  Donnadieu  in  all  the  costs,  includ- 
ing those  of  the  intervention  of  Lamarquis;  makes  allowance  in  said 
costs  in  favor  of  de  BieVille,  Duhourg,  and  Charneau,  solicitors,  as 
requested. 

The  minutes  of  the  present  judgment  have  been  signed  at  the  end: 
Ditto  and  Barue. 

Done  and  adjudged  in  public  audience  of  the  first  chamber  of  the 
civil  tribunal  of  first  instance  of  the  Department  of  the  Seine,  sitting 
in  the  palace  <>!'  justice  at  Paris,  by  Messrs.  Ditte,  president;  Monier, 
vice-president;  Le  Berquier,  judge:  in  presence  of  Messrs.  Chauvin, 
substitute  judge,  and  Home,  substitute  of  the  attorney  of  the  Republic, 
assisted  by  Pa  rue.  clerk,  the  3d  July,  1902. 

In  consequence,  the  President  of  the  French  Republic  commands 
and  orders  all  bailiffs,  upon  request,  to  put  the  present  judgment  into 
execution;  the  general  public  attorney  and  attorneys  of  the  Republic 
near  the  tribunals  of  first  instance  to  aid  therein:  all  commandants 
and  officers  of  the  public  force  to  lend  forcible  assistance  when  law- 
fully requested. 

In  faith  whereof  the  minutes  of  the  present  judgment  have  been 
signed  by  the  President  and  by  the  clerk. 

On  the  margin  of  said  judgment  is  a  note  of  its  recording,  as  follows: 
"  Recorded  at  Paris  the  12th  of  July.  1902,  folio  2,  case  8.  Received, 
18  francs  75  centimes." 

(Signed)  Rech, 

The  Receiver. 

By  the  tribunal: 
Compared. 

Coquet. 


EXHIBIT  6. 

ARGUMENT  BEFORE  COURT  OF  APPEALS  IN  DONNADIEU  CASE,  AND 
DECREE  OF  THAT  COURT  OF  AUGUST  5,  1902. 

[Shorthand  report  made  by  the  court  stenographer  for  Uinited  States  Department  of  Justice.] 

Session  of  5th  of  August,  1902,  of  the  court  of  appeals  of  Paris. 
M.  Lefebvre  de  Viefville,  president;  M.  Fremont,  advocate-general. 

M.  Donnadieu  j 

The  Panama  Canal  Company,  f 

ARGUMENT  OF  MASTER  THIEBLIN. 

I  am  going  to  read  to  you.  gentlemen,  the  judgment  which  has  been 
rendered  by  the  tribunal,  the  confirmation  of  which  we  ask  of  you. 

M.  Donnadieu  is  a  bondholder  of  the  Panama  Company:  he  has 
attacked  by  way  of  tierce-opposition  the  judgment  which  was  rendered 
by  the  tribunal  of  the  Seine  in  the  month  of  March,  1902,  a  judgment 
which  authorized  the  liquidator  of  the  Panama  Company  to  associate 
himself  in  the  negotiations  instituted  with  the  New  Panama  Canal 


PANAMA  CANAL  TITLE. 


89 


Company  by  the  Government  of  the  United  States  for  the  cession  of 
the  Panama  Canal  to  the  Government  of  the  United  States.  We  have 
asked  the  tribunal  to  declare  that  M.  Donnadieu,  in  the  character  of 
a  bondholder  of  the  Panama  Company,  was  not  entitled  to  make  such 
tierce-opposition  under  the  terms  of  article  11  of  the  law  of  1893, 
which  creates  a  special  situation  outside  of  the  ordinary  law. 

At  the  same  time  the  New  Panama  Canal  Company  summoned  M. 
Donnadieu  before  the  tribunal  in  order  to  have  it  declared  (M.  Don- 
nadieu had  put  in  his  opposition  to  that  cession,  to  that  sale,  which 
opposition  had  been  notified  to  divers  persons,  by  M.  Donnadieu.  and 
especially  to  the  Government  of  the  United  States  in  the  person  of 
its  ambassador,  in  which  notifications  he  declared  that  he  opposed  the 
sale  and  that  he  would  demand  that  it  should  be  declared  null  and 
void)  the  New  Panama  Canal  Company  summoned  M.  Donnadieu 
before  the  tribunal  to  have  it  declared,  that  his  opposition  was  inad- 
missible, that  no  attention  should  be  paid  to  it:  it  demanded  against 
M.  Donnadieu.  a  condemnation  in  damages  for  the  prejudice  occasioned 
by  the  attitude  which  he  had  thus  taken. 

The  following,  gentlemen,  is  the  judgment  which  was  rendered  by 
the  tribunal: 

The  cases  being  united  on  account  of  their  connection  with  each  other  and  deter- 
mining by  one  and  the  same  judgment,  etc.    *    *  * 

M.  Donnadieu  has  appealed  from  this  judgment,  but  he  has  been 
obliged  to  recognize  that  the  reasoning  of  the  judgment  is  altogether 
unobjectionable.    It  may  be  summarized  as  follows: 

The  tribunal  has  passed  upon  a  request  made  by  M.  Gautron,  as 
liquidator  of  the  old  Panama  company,  to  be  authorized  to  sell  accord- 
ing to  the  project,  according  to  the  negotiations,  to  sell  in  concurrence 
with  the  new  company  the  concession  of  the  Panama  Canal  and  the 
works  which  have  been  accomplished. 

The  law  of  1893  requires  the  publication  of  that  judgment,  in  order 
to  give  notice  to  those  who  might  wish  to  oppose  it:  but  at  the  same 
time  the  law  of  1893  limits  the  right  of  opposition:  it  limits  it  in  the 
matter  of  time.  Article  11  only  permits,  in  effect,  the  tierce  opposi- 
tion to  that  judgment  to  be  put  in  within  a  month  from  the  date  of 
its  publication.  After  that  time  all  tierce  opposition  is  inadmissible, 
and  the  judgment  has  acquired,  with  regard  to  all  persons,  the  author- 
ity of  res  adjudicata. 

The  law  of  1893  limits  the  tierce  opposition  likewise  with  regard  to 
persons.  There  are  only  three  classes  of  persons  who,  according  to 
the  terms  of  article  11  of  the  law  of  1893,  can  put  in  tierce  opposition; 
these  are  stockholders  of  the  old  company,  the  mandataire  of  the  bond- 
holders who  represents  all  the  bondholders,  and  the  other  creditors  of 
the  company. 

M.  Donnadieu  put  in  his  tierce  opposition  within  the  month,  but  it 
remains  to  inquire  whether  M.  Donnadieu  comes  within  one  of  the 
three  classes  referred  to. 

He  is  not  a  stockholder*,  he  is  not  a  mandataire  of  the  bondholders. 
Is  he  one  of  the  other  creditors  of  the  company  \ 

He  maintains  that  he  was  a  creditor  of  the  company  and  was  not  a 
bondholder,  because,  before  the  law  of  1893,  which  has  prohibited 
individual  suits,  he  had,  making  use  of  the  running  of  the  clock  which 
the  legislature  saw  lit  to  interrupt,  attacked  a  judgment  against  the 
liquidation  based  upon  the  bonds  of  which  he  was  a  holder. 


90 


PANAMA   CANAL  TITLE. 


Then  said  he:  "I  am  no  longer  a  holder  of  bonds.  I  am  ;i  creditor 
who  is  the  holder  of  a  judgment.    I  am  a  creditor  of  the  company." 

The  tribunal  answers:  "Not  at  all;  you  are  always  a  holder  of  bonds, 
only  a  holder  of  bonds  who  has  had  the  advantage  to  have  received, 
before  the  law  of  1893,  a  recognition  of  his  situation  as  bondholder 
and  to  have  it  settled  by  a  judgment  which  has  passed  into  the  condi- 
tion of  res  ad  judicata;  you  are  decidedly  a  bondholder;  but  if  you  are 
a  bondholder,  3  011  can  not  put  in  tierce  opposition,  because  the  man- 
dataire  alone  can  do  that." 

Here,  gentlemen,  I  find  an  objection  which  was  invincible  by  M. 
Donnadieu,  and  which  has  prevented  him  from  proceeding  in  the  way 
of  his  appeal.    It  is  that  this  has  already  been  adjudged  by  yourselves. 

M.  Laplante  had  previously  desired  to  make  tierce  opposition  to  a 
judgment,  which  was  entered  as  between  the  mandataire  of  the  bond- 
holders and  the  liquidator.  He  also  was  a  bondholder.  Hi^  demand 
was  denied  for  several  motives,  and  especially  for  one  taken  from  the 
application  of  article  11  of  the  law  of  1893.  That  judgment  bears  date 
of  the  10th  of  May,  L899,  and  it  has  been  confirmed  by  adoption  of  the 
reasoning  of  the  lower  court  in  a  decree  of  your  own  of  the  ^5th 
of  April,  1900.  If  the  court  wishes,  here  are  the  motives  which  were 
adopted: 

That  in  the  second  place  the  tierce  opposition,  where  it  is  restrictively  admitted  by 
the  law  of  1893,  is  permitted  by  the  articles  above  mentioned  only  to  the  persons 
whom  they  enumerate — that  is  to  say,  the  stockholders,  the  mandataire  of  the  bond- 
holders, and  the  other  company  creditors. 

That  it  is  not  allowed  to  the  bondholders  taken  singly.    *    *  * 

These  are  the  very  terms  which  have  been  reproduced  in  the  judg- 
ment here  appealed  from,  and  consequently  you  have  already,  gentle- 
men, admitted  the  truth  of  this  proposition. 

M.  Gautron  has  been  under  the  necessity  of  making  . as  against  M. 
Donnadieu  this  point  of  inadmissibility.  This  was  not,  you  under- 
stand very  well,  from  fear  of  the  judgment  as  to  its  merits,  for  the 
reasons  upon  which  M.  Donnadieu  made  his  tierce  opposition  to  that 
judgment  were  reasons  devoid  of  every  kind  of  foundation.  There  was 
another  reason  of  a  public  nature.  M.  Gautron  was  not  able  to  mis- 
understand the  provisions  of  the  law  of  1893  which  protect  the  liquida- 
tion, and  he  is  bound  to  seek  to  have  maintained  the  course  of  decision 
referred  to  in  order  that  there  may  not  be  other  cases  of  tierce 
opposition  put  in  at  inopportune  times  to  embarrass  the  liquidation  of 
me  Panama  company. 

It  is  in  this  state  of  affairs  that,  confining  myself  to  the  role  which 
belongs  to  me — that  is  to  say,  the  examination  of  the  judgment  so  far 
as  the  tierce  opposition  is  concerned  Avith  it — that  I  ask  you  to  perse- 
vere in  3rour  course  of  decision  of  1900  and  to  confirm  by  adoption  of 
the  reasons  given  below  the  judgment  appealed  from. 

ARGUMENT  OF  MASTER  LIMBOURG. 

Two  words,  gentlemen,  if  the  court  will  permit,  in  order  to  explain 
the  attitude  taken  to-day  before  it  by  the  legal  mandataire  of  the  bond- 
holders, and  in  order  to  say  why  he  has  not  made  use  in  this  case  of 
the  right  which  belongs  to  him  by  the  special  law  of  1893,  and  which 
belongs  to  him  alone,  to  make  tierce  opposition  to  the  judgment  of 
approval  rendered  by  the  tribunal  of  the  Seine. 


PANAMA  CANAL  TITLE. 


91 


When  the  cessions  made  by  the  liquidator  of  the  old  Panama  Canal 
Company,  gentlemen,  could  be  the  object  of  different  opinions  as  to 
their  merits,  M.  Lemarquis  has  made  use  of  the  special  right  which 
the  law  of  1893  gave  him.  It  is  thus  that  when  the  liquidator 
demanded  approval  for  tin1  cession  which  he  proposed  to  make  to  the 
new  Panama  Company  of  all  the  assets  of  the  company,  M.  Lemarquis 
made  tierce  opposition  to  the  judgment  of  approval. 

It  is  not,  gentlemen,  that  M.  Lemarquis  criticised  that  cession;  it 
was  on  account  of  a  very  delicate  scruple  and  out  of  respect  for  the 
interest  of  the  involuntary  principals  which  the  special  law  had  given 
him,  in  order  to  permit  them  to  present  their  observations  upon  inter- 
vening in  the  proceeding  of  tierce  opposition,  if  they  judged  it 
advisable. 

It  could  then  be  a  question  whether  it  was  more  to  the  interest  of 
the  bondholders  to  continue  the  enterprise  or  to  have  an  immediate 
settlement. 

To-day  the  situation  is  no  longer  the  same.  No  doubt  can  be  had 
upon  the  merits  of  the  proposed  cession.  There  are  but  two  possible 
solutions — either  the  sale  of  the  enterprise  or  the  construction  of  the 
canal. 

But  the  construction  of  the  canal  will  require  the  creation  of 
resources  Avhich  can  only  be  obtained  by  an  appeal  to  the  public.  No 
one  will  venture  to  try  that,  and  1  do  not  believe  that  M.  Donnadieu 
himself,  if  a  request  of  that  kind  were  made  to  him,  would  respond  to 
an  appeal  for  funds.  It  is  necessary  then  to  be  resigned  to  the  sale,  and 
it  is  because  that  is  the  better  proceeding,  the  better  solution,  for  the 
interest  of  the  holders  of  bonds  that  M.  Lemarquis  has  abstained  from 
making  tierce  opposition  to  the  judgment  of  approval. 

ARGUMENT  OF  MASTER  GONTARD. 

Gentlemen:  You  know  from  the  explanations  which  have  been 
given  you  by  Master  Thieblin  that  the  newr  Panama  Canal  Company  has 
proceeded  against  M.  Donnadieu  to  have  thrown  out  the  opposition 
notified  Iry  him  to  the  company  itself  and  to  the  ambassador  of  the 
United  States  of  America  at  Paris. 

The  tribunal,  put  in  possession  of  our  demand,  declares  that  M.  Don- 
nadieu is  without  right  and  standing  to  notify  the  said  opposition,  and 
so  far  as  necessary,  following  the  reasonings  wThich  we  have  sub- 
mitted, throws  out  the  opposition  and  notifications  referred  to. 

In  the  judgment,  gentlemen,  there  are  two  reasons  given  in  support 
of  that  decision.  The  first  is  that  M.  Donnadieu  is  without  right  and 
standing. 

In  effect,  M.  Donnadieu — you  know  this  from  the  explanations 
which  have  been  made  to  you — is  not  a  stockholder  of  the  new  com- 
pany of  the  Panama  Canal,  and  he  is  no  more  one  of  its  creditors. 

The  President.  In  his  brief  submitted  he  maintains  that  the  new 
Panama  Canal  Company,  whose  advocate  you  are,  could  not  without 
violating  its  b}T-laws  cede  the  canal. 

Master  Gontard.  I  will  furnish  explanations  on  that  point.  I  am 
explaining  very  rapidly  the  reasonings  of  the  tribunal,  reasonings 
which  seem  to  me  absolutely  conclusive. 

These  reasons  are  that  M.  Donnadieu  is  inadmissible  because  with- 
out right  and  without  standing  with  regard  to  the  company.    He  is 


92 


PANAMA  CANAL  TITLE. 


without  right  and  standing,  I  say,  on  one  hand  because  he  is  not  a 
stockholder  of  the  new  company,  on  the  other  hand  because  he  is  not 
a  bondholder  of  it. 

Consequently  M.  Donnadieu  has  no  right  to  make  any  opposition, 
any  notification  whatever,  unless  it  be  in  exercising  the  rignts  of  his 
own  debtor,  namely,  the  old  company  (article  1 L66),  or  in  bringing  a 
direct  personal  action  which  might  belong  to  him  in  ease  of  collusion 
(article  1167  of  the  Civil  Code). 

As  to  article  1166  there  can  be  no  question,  for  the  excellent  reason 
that  a  creditor  can  not  make  use  of  the  rights  of  his  debtor  except 
where  the  latter  does  not  himself  act.  But  in  the  present  instance  the 
debtor  does  act,  since  that  debtor  is  the  Liquidation  of  the  old  Panama 
Company,  and  since  it  is  an  act  of  M.  Gautron  that  M.  Donnadieu 
pretends  to  criticise  by  way  of  tierce  opposition. 

As  for  article  1167,  there  is  no  question  for  the  excellent  reason  that 
M.  Donnadieu  does  not  dare  raise  his  voice  with  regard  to  any  collu- 
sion of  any  kind  whatever  as  existing  between  M.  Gautron  or  M. 
Lemarquis — alwa}^s  solely  mindful  of  the  interests  which  have  been 
confided  to  them — and  the  New  Panama  Canal  Coinpan}T. 

As  a  result  he  is  absolutely  inadmissible,  certainly  so,  and  to  sum 
up  (permit  me  to  make  use  of  this  consideration  which  has  been  devel- 
oped by  the  advocate  of  the  Republic  in  the  first  instance),  M.  Don- 
nadieu, by  his  notification  or  his  opposition,  undertakes  to  make  use 
of  a  power  which  does  not  belong  to  him.  a  power  to  make  opposition 
at  a  given  time,  when  to  that  opposition  the  law  of  1893,  which  has 
just  been  analyzed  for  you,  puts  an  insurmountable  obstacle. 

Is  it  to  be  said  that  1  would  have  any  distrust  of  going  to  the  founda- 
tion of  the  matter  and  considering  the  two  observations  which  M. 
Donnadieu  has  made  in  his  reasonings  on  appeal  after  having  already 
indicated  them  in  the  court  of  first  instance?  By  no  means,  and  I  am 
going  to  demonstrate  that  to  you. 

What  are  these  objections?  There  are  two  of  them.  He  sa}Ts  to 
you  on  one  hand:  The  New  Panama  Canal  Company  can  not  cede  the 
canal. 

It  can  not  cede  the  canal?  Why?  What  reasons  does  he  give?  It 
can  not  cede  the  canal  because,  according  to  the  terms  of  its  by-laws, 
its  object  is  the  carrying  on  of  the  canal;  because  by  the  terms  of 
article  60  of  the  same  by-laws  it  can  not  change  this  object  as  to  its 
essence,  and  because  the  sale  of  the  canal  would  place  the  company  in 
a  position  where  it  would  be  impossible  to  carry  it  on,  and  conse- 
quently to  carry  out  what  was  its  object.  It  can  not  change  that 
object,  says  M.  Donnadieu,  it  can  not  suppress  it  by  the  sale;  conse- 
quent^ the  sale  is  not  possible. 

You  understand  very  well  that  it  is  easy  to  push  this  reasoning  to 
an  absurdit}T  in  order  to  show  its  error,  for  this  reasoning  conducts 
to  nothing  less  than  to  condemn  to  life  companies  which,  not  having 
accomplished  their  object,  have  a  greater  interest  in  ceasing  to  exist 
during  the  time  fixed  for  their  duration. 

This  is,  so  to  speak,  an  absurdity  arising  from  the  b}T-laws  of  the 
company,  but  here  there  is  more;  it  is  that  our  adversary  forgets  that 
by  the  terms  of  article  60  of  the  by-laws  which  he  invokes  so  far  as  it 
forbids  the  company  to  modify  its  object,  he  forgets  that  in  the  same 
article  60  the  anticipated  dissolution  of  the  company  is  provided  for, 


PANAMA   CANAL  TITLE. 


93 


and  consequently  the  right  of  the  company  to  put  an  end  to  its  company 
life  when  it  has  an  interest  in  so  doing  is  provided  for. 

Then,  if  the  anticipated  dissolution  is  contemplated  by  the  by-laws, 
the  company  has  the  right  to  put  an  end  to  the  company  life;  conse- 
quently the  l  ight  to  proceed  to  liquidation  and  sale  of  the  concessions 
w  hich  belong  to  it.  It  appears  to  me,  gentlemen,  that  on  this  point 
there  can  be  no  doubt  in  the  mind  of  any  man  of  good  faith  who  wishes 
to  examine  the  by-laws  of  the  New  Panama  (anal  Company. 

Consequently,  where  does  there  appear  any  transgression  of  the 
social  compact  if  we  place  ourselves  absolutely  in  the  posit  ion  M.  Don- 
nadieu takes  and  admit  that  he  has  the  right  to  discuss  here  our  social 
compact,  in  a  thing  which  is  in  reality  but  the  application  of  the  com- 
pact itself  \ 

The  sale,  he  says,  is  the  suppression  of  the  company's  object.  But 
he  ought  to  continue  further;  it  is  the  anticipated  dissolution.  But 
the  anticipated  dissolution  is  foreseen  by  the  by-laws;  it  is  lawful  and 
possible.  Then  the  sale  of  the  canal  is  possible  and  lawful  in  the  same 
circumstances  as  the  anticipated  dissolution.  This  first  argument,  then, 
is  not  serious. 

There  is  another  which,  I  believe,  is  not  contained  in  the  reasonings 
on  appeal  which  have  been  communicated  to  me.  It  was  made  use  of 
byM.  Donnadieu  in  the  court  of  first  instance,  and  may  be  stated  thus: 
It  is  tha.t  the  stipulation  which  took  place  between  the  new  company 
and  the  liquidation  of  the  old  company  obliged  the  New  Panama  Canal 
Company  to  carry  on  the  canal. 

This  is  the  reasoning:  By  the  terms  of  the  by-laws,  as  compensation 
for  the  contribution  made  by  the  liquidation  of  the  old  company  to  the 
new  company,  it  was  allowed  60  per  cent  of  the  benefits  of  carrying 
on  the  canal.  The  new  company,  says  M.  Donnadieu,  can  not  free 
itself  from  this  60  per  cent;  it  can  not  free  itself  by  selling  the  canal; 
then  it  can  not  sell  the  canal. 

You  will  remark,  gentlemen,  that  this  is  the  first  argument  repro- 
duced under  another  form;  consequently  the  response  which  I  have 
had  the  honor  of  indicating  for  the  first  argument  applies  to  the  second. 

But  let  us  go  further. 

In  what  is  stated,  there  is  an  error  which  belies  the  right  of  antici- 
pated dissolution  given  to  the  new  company  by  article  60,  as  also  the 
provisions  of  another  article  of  the  by-laws,  article  5,  which  contem- 
plates the  case  of  the  nonexecution  of  the  canal. 

Hence  the  sole  question  which  presents  itself  in  the  case  of  a  sale  is 
the  question  of  the  division  of  the  price,  upon  which  the  by-laws  con- 
tain nothing  in  express  terms,  but  upon  which  the  by-laws  impliedly 
contain  some  information,  a  question  which  has  been  settled  by  the 
arbitration  to  which  allusion  has  been  made  in  the  documents  of  tierce 
opposition  presented  by  M.  Donnadieu.  I  venture  to  observe  also  that 
the  contributor  of  property  in  kind  to  the  company  about  to  be  formed, 
who  has  been  the  author  of  the  stipulations  concerning  the  contribu 
tion,  is  the  sole  judge  of  the  consequences  which  the  alienation  of  the 
whole  or  part  of  the  properties  may  cany  with  it  in  respect  of  the 
stipulations  which  he  has  made. 

In  the  present  case,  the  assent  of  the  liquidator,  the  contributor  to 
the  new  company,  an  assent  shown  by  the  judgment  of  approval  accord- 
ing to  the  terms  of  the  law  of  July  1,  1893,  is  of  such  a  nature  as  to 


94 


PANAMA   CANAL  TITLE. 


safeguard  all  rights,  all  interests.  And  the  fact  itself,  gentlemen,  that 
M.  Gautron  has  intervened  in  the  negotiations,  he  being  the  liquidator 
of  the  old  compan}r,  that  M.  Gautron,  on  the  other  hand,  is  protected 
in  the  arrangements  to  which  he  has  given  his  assent  by  the  high 
approval  given  by  the  tribunal  according  to  the  terms  of  the  law  of 
L893,  causes  to  disappear  all  objection  under  this  heading  and  all 
uncertainty. 

In  conclusion  (here  I  return  to  the  argument  made  by  M.  Thieblin), 
it  is  necessary  to  recognize  that  no  one  interested  is  admissible  to  crit- 
icize or  contradict  the  assent  given  by  M.  Gautron  except  under  the 
terms  of  the  law  of  July,  1898,  that  M.  Donnadieu  is  not  at  all  within 
the  terms  of  that  law,  and  that  from  this  point  of  view  M.  Donnadieu 
can  not  make  any  objection. 

Thus,  you  see,  M.  Donnadieu,  who  is  inadmissible,  very  certainly, 
as  a  result  of  his  lack  of  standing  (<|iialite).  who  can  not  exercise  the 
action  oblique  of  article  1166,  winch  does  not  belong  to  him  be  it 
remarked,  in  the  presence  of  a  debtor  who  himself  exercises  the  right, 
M.  Donnadieu.  who  can  not  pretend  to  make  use  of  the  suit  allowed 
by  article  1167  for  the  excellent  reason  that  he  will  not  venture  to 
pronounce  the  word  "fraud,"  which  woidd  be  necessary  for  that  suit, 
M.  Donnadieu,  not  admissible,  is  certainly  on  the  merits  without  good 
grounds  of  proceeding,  for  the  argument  which  he  develops  (there  are 
two  of  them,  but  he  develops  only  one,  since  the  two  are  inconsistent 
with  each  other),  the  argument  taken  from  article  60 falls,  because  that 
article  permits  the  company  to  dissolve  itself  by  anticipation. 

Then,  independently  of  general  principles  which  conduct  us  to  this 
solution,  we  have  the  texts  themselves,  w  hich  very  certainly  show  the 
lack  of  foundation  for  the  objection  of  M.  Donnadieu. 

It  is  with  these  short  observations  that  1  persist  confidently  in  the 
reasonings  which  I  have  submitted  in  writing. 

The  President.  Outside  of  the  opposition  made  by  M.  Donnadieu, 
is  there  any  opposition  to  the  sale,  made  by  some  of  the  stockholders? 

M.  Thieblin.  None,  and  there  was  no  tierce  opposition  in  the  period 
of  one  month,  consequently  1  am  in  the  presence  of  all,  and  all  persons 
are  bound. 

In  the  most  general  way,  the  judgment  which  approved  on  the  19th 
of  March,  1902,  the  project  of  cession,  is  a  judgment  which  has 
acquired  the  authority  of  res  ad  judicata;  it  is  unattackable. 

The  President.  Mr.  Advocate-General,  w  hat  are  your  reasonings? 

Advocate-General  Fremont.  I  think  there  should  be  continuation. 

The  President.  The  decree  will  be  rendered  at  the  resumption  of 
the  session. 

The  session  is  suspended. 

DECREE  OF  THE  COURT. 

Adopting  the  reasons  of  the  first  judges,  wThich  respond  sufficiently 
to  the  conclusions  of  the  parties. 

Confirms  in  all  its  provisions  and  condemnations  the  judgment 
appealed  from. 

Rejects  all  contrary  reasonings  of  Donnadieu. 

Condemns  the  appellant  in  the  fine  and  costs. 


PANAMA  CANAL  TITLE. 


95 


EXHIBIT  7. 

JUDGMENT  OF  JULY  3,  1902   (CIVIL*  TRIBUNAL  OF  THE  SEINE), 
DECIDING  AGAINST  SAUTEREAU. 

[3d  of  July;  First  chamber,  No.  2— First  section,] 
THE    FRENCH    REPUBLIC,  IN  THE   NAME  OF  THE   FRENCH  PEOPLE. 

The  civil  tribunal  of  first  instance  of  the  department  of  the  Seine, 
sitting  in  the  palace  of  justice  at  Paris,  has  rendered  in  public  session 
of  the  tirst  chamber  the  following  judgment,  session  of  3d  July,  1902. 

Between  the  New  Panama  Canal  Company,  an  anonymous  associa- 
tion having  its  headquarters  at  Paris,  Rue  Louis  le  Grande,  No.  7,  act- 
ing through  the  president  and  members  of  its  council  of  administration, 

Plaintiff,  appearing,  briefing,  and  arguing  by  Maitre  Gontard,  advo- 
cate, assisted  by  Maitre  Dubourg,  solicitor, 

On  the  one  part, 

And  M.  Sautereau,  engineer,  dwelling  at  Paris,  Rue  Tarthout,  14, 
proceeding  as  well  in  his  personal  name  as  in  the  name  and  character 
of  alleged  "director  of  the  International  Association  of  Studies  for 
the  Accomplishment  of  the  Panama  Canal," 

Defendant,  appearing  by  Maitre  Vorgeot,  solicitor,  in  default,  not 
having  sumitted  his  brief, 

On  the  other  part, 

Without  the  present  characters  of  the  parties  being  able  to  preju- 
dice in  any  manner  their  respective  rights  and  interests. 

POINT  OF  FACT. 

The  plaintiff  alleging  that  according  to  a  document  out  of  court 
through  the  instrumentality  of  Baudin,  bailiff  at  Paris,  dated  the 
20th  of  December,  1901,  served  upon  the  plaintiff,  M.  Sautereau 
declared  his  opposition  to  the  sale  as  well  as  to  the  putting  into  execu- 
tion of  a  project  for  the  construction  of  the  canal  adopted  by  the 
new  company,  which  he  declared  to  be  his  propert}^  or  that  of  those 
in  privity  with  him,  adding  that  he  made  all  reservations  to  obtain  all 
recoveries  that  he  might  be  entitled  to; 

That,  in  support  of  his  opposition,  M.  Sautereau  alleged,  especially, 
that,  after  several  years  of  alleged  studies,  the  new  company  had 
adopted  a  definitive  project  for  the  accomplishment  of  a  canal  at 
Panama,  which  was  an  exact  and  complete  reproduction  of  a  project 
submitted  by  him  to  the  liquidation  of  the  first  Panama  Canal  Com- 
pany, which  constituted,  he  said,  a  veritable  spoliation  of  his  rights 
and  the  rights  of  those  interested  with  him— the  International  Asso- 
ciation of  Studies  for  the  Accomplishment  of  the  Panama  Canal,  of 
which  he  was  the  founding  director; 

That  M.  Sautereau  complains,  consequently,  of  never  having  received, 
notwithstanding  his  reiterated  demands,  any  reimbursement  nor  any 
remuneration  whatever  for  all  the  work,  studies,  proceedings  of  all 
kinds,  etc.,  undertaken  by  him  on  behalf  of  the  liquidation  of  the  first 
Panama  company;  and  because,  although  these  things  constituted  a 
notable  part  of  the  assets  of  the  new  Panama  company,  the  latter  pro- 
posed to  sell  them  to  the  Americans  in  disregard  of  his  rights; 


96 


PANAMA  CANAL  TITLE. 


But  that  there  did  not  exist  any  legal  relation,  ("lien  de  droit,") 
between  M.  Sautereau  in  his  aforesaid  characters  and  the  plaintiff 
company ; 

That  the  opposition  above  mentioned  was  made  without  legal  title 
or  authority;  that  it  is  proper  to  establish  its  nullity  and  to  declare  a 
release  therefrom  pure  and  simple. 

Done  according  to  document  through  the  instrumentality  of  Eignet, 
bailiff  at  Paris,  dated  25th  April,  1902,  recorded,  to  serve  notice  upon 
M.  Sautereau  to  appear  within  eight  full  days  allowed  by  law  and 
through  the  instrumentality  of  an  advocate  constituted  at  the  session  of 
and  before  the  president  and  judges  composing  the  civil  tribunal  of  the 
Seine,  at  the  palace  of  justice  at  Paris,  11  o'clock  in  the  morning,  in 
order,  for  the  above-stated  reasons. 

To  have  declared  null  and  of  no  effect  the  opposition  notified  at  the 
request  of  M.  Sautereau  in  the  characters  aforesaid,  served  by  him 
upon  the  company  plaintiff  according  to  document  of  Baudin,  dated 
at  Paris,  20th  December,  1901; 

And  to  have  decreed  release  pure  and  simple,  entire  and  definitive, 
therefrom;  and  to  have  M.  Sautereau  condemned  in  all  the  costs, 
under  all  the1  reservations  and  notably  reserving  all  damages. 

Upon  the  summons  which  contains  the  constitution  of  Maitre  Du- 
bourg,  solicitor  for  the  New  Panama  Canal  Company,  M.  Vorgeot, 
solicitor,  was  constituted  for  M.  Sautereau,  according  to  document  of 
the  palace,  dated  2d  May.  L902. 

Record  was  drawn  up  by  M.  Dubourg,  solicitor  for  the  plaintiff, 
and  the  case,  entered  upon  the  general  roll  of  the  clerk's  office,  was 
distributed  to  the  civil  tribunal  of  the  Seine,  before  which,  according 
to  document  of  the  palace,  dated  9th  June,  1902,  M.  Dubourg  gave 
notice  to  his  confrere  for  Wednesday,  11th  June  following,  for  argu- 
ment. 

On  said  day,  and  after  several  successive  postponements,  M.  Vorgeot, 
solicitor,  not  having  tiled  his  brief  on  the  merits,  and  the  matter  hav- 
ing been  called  up  regularly  at  the  session  of  this  day,  M.  Gontard, 
advocate,  assisted  by  M.  Dubourg,  solicitor  of  the  plaintiff,  presented 
himself  at  the  bar  of  the  court,  and  required  finding  of  default  against 
M.  Sautereau  and  Maitre  Vorgeot,  his  solicitor,  for  not  having  filed 
his  brief,  and  adjudication  of  the  proposition  of  his  original  pleading. 

The  public  minister  has  been  heard  as  to  his  conclusions.  In  this 
condition  the  ca.se  presents  for  adjudication  the  following  question: 

POINT  OF  LAW. 

Should  the  tribunal  declare  default  against  M.  Sautereau  and  Maitre 
Vorgeot,  his  solicitor,  for  failing  to  tile  brief,  etc.  ? 

Should  it  declare  null  and  of  no  effect  the  opposition  notified  at  the 
request  of  M.  Sautereau  in  the  characters  in  which  he  appears  to  the 
plaintiff  company,  according  to  the  document  of  Baudin,  bailiff,  at 
Paris,  dated  20th  December,  1901? 

Should  it  order  release  therefrom  pure  and  simple,  entire  and 
definitive? 

Should  it,  on  the  contrary,  declare  the  New  Panama  Canal  Company 
inadmissible  or  unfounded  in  its  demands  and  dismiss  it? 
What  as  to  costs? 

With  all  reservations.  Document  submitted.  For  original.  Signed 
Dubourg. 


PANAMA  CANAL  TITLE. 


97 


The  tribunal,  having  examined  and  heard  the  various  propositions 
and  pleadings  of  Gontard.  advocate,  assisted  by  Dubourg,  solicitor  of 
(ln>  New  Panama  Canal  Company,  acting  through  its  president  and  the 
council  of  administration; 

The  public  ministry  having  been  heard,  after  having  deliberated 
according  to  law,  judging  in  an  ordinary  matter  and  in  first  resort: 

Declares  default  against  Sautereau  and  Vorgeot,  his  solicitor,  for. 
not  having  tiled  a  brief,  and  gives  judgment  of  default  in  favor  of  the 
plaintiff; 

Considering  that  according  to  a  document  out  of  court,  served 
through  Baudin,  bailiff  at  Paris,  dated  20th  December.  L901,  upon  the 
New  Panama  Canal  Company,  Sautereau  declared  himself  opposed  to 
the  sale  as  well  as  the  putting  into  execution  of  a  project  for  con- 
struction of  the  canal  by  the  new  company;  that  he  claim-  it  to  be  his 
property  or  that  of  those  interested  with  him.  adding  that  he  made  all 
reserves  to  obtain  all  recoveries  which  might  belong  to  him; 

Considering  that  in  support  of  his  opposition  Sautereau  alleges  espe- 
cially that  after  several  years  of  alleged  studies  the  New  Panama  Canal 
Company  adopted  a  definitive  project  for  the  accomplishment  of  a 
canal,  which  will  be  the  exact  and  complete  reproduction  of  the  project 
submitted  by  him  to  the  first  Panama  Canal  Company,  which  will  con- 
stitute, he  says,  a  veritable  spoliation  of  his  rights  and  of  the  rights 
of  those  interested  in  the  International  Association  of  Studies  for  the 
Accomplishment  of  the  Panama  Canal. 

Considering  that  Sautereau  complains  in  consequence  that  he  has 
never  received,  notwithstanding  his  repeated  demands,  any  reimburse- 
ment nor  any  remuneration  for  all  his  work,  studies,  proceedings  of  all 
kinds,  etc.,  undertaken  by  him  on  account  of  the  liquidation  of  the 
first  Panama  company,  and  because,  while  these  works  constitute  a 
notable  part  of  the  assets  of  the  New  Panama  Canal  Company,  the  latter 
proposed  to  sell  them  to  the  Americans  in  contempt  of  his  rights; 

But,  considering  that  there  exists  no  legal  relation  between  Saute- 
reau in  his  characters  aforesaid  and  the  plaintiff  company: 

That  the  opposition  above  stated  was  made  without  title  or  authority : 

That  it  is  proper  to  establish  its  nullity  and  to  declare  pure  and 
simple  release  for  it  for  these  reasons; 

Declares  null  and  void  the  opposition  notified  at  the  request  of  Sau- 
tereau in  his  characters  aforesaid  to  the  plaintiff  company  by  docu- 
ment of  Baudin,  bailiff  at  Paris,  dated  December  20,  1901; 

Decrees  a  release  therefrom  pure  and  simple,  entire  and  definitive, 
and  condemns  Sautereau  in  all  the  costs,  from  which  an  allowance  is 
made  for  Dubourg,  solicitor,  who  has  demanded  it. 

(Signed)  Ditte  and  Barue. 

Done  and  adjudged  by  Monsieur  Ditte,  president;  Monier,  vice- 
dent;  Le  Berquier,  judge; 

In  presence  of  M.  Chauvin,  substitute  judge;  M,  Rome,  substitute, 
assisted  by  Barue,  clerk,  the  3d  July,  1902. 

In  consequence,  the  President  of  the  French  Republic  commands 
and  orders  all  bailiffs  required  to  do  so  to  put  the  present  judgment  in 
execution,  etc. 


8751—02  7 


<.)8 


CERTIFICATE  OP  SERVICE — PANAMA  COMPANY  AM)  BAUTKEEAU. 


•ANAMA  CANAL  TITLE. 


I,  the  undersigned,  Firmin  Paul  Dubourg,  attorney  of  the  Civil 
Tribunal  of  the  Seine,  residing"  at  Paris,  No.  5  Place  St.  Michel, 

Certify  that  a  judgment  rendered  by  default  for  failure  to  defend 
by  the  First  Chamber  of  the  Civil  Tribunal  of  the  Seine,  on  Thursday, 
July  3,  1902,  recorded,  between: 

The  New  Panama  (anal  Compan}%  a  joint  stock  company,  having  its 
principal  office  at  Paris,  No.  7  rue  Louis-le-Grand,  acting  by  and 
through  the  President  and  members  of  its  Board  of  Directors, 

Plaintiff,  for  whom  I  appeared, 

And  M.  G.  Sautereau,  engineer,  residing  at  Paris,  No.  14  rue 
Taitbout,  a  party  as  well  in  his  personal  name  as  in  the  name  of,  and 
calling  himself  ik  Manager  of  the  Societe  Internationale  d'Etudes  pour 
l'achevement  du  Canal  de  Panama," 

Assisted  by  Me  Norgeot,  attorney, 

Which  judgment  dissolved  the  prohibition  served  at  the  request  of 
M.  Sautereau,  in  his  official  capacity,  upon  the  company  making  appli- 
cation, according  to  notice  of  Baudin,  Court  Officer  at  Paris,  elated 
December  20,  1901, 

Was  served  upon  the  attorney,  by  notice  in  court  of  the  date  of 
July  11, 1902,  and  upon  the  party,  according  to  the  return  of  Peignet, 
Court  Officer  at  Paris,  under  date  of  July  15,  1902,  recorded. 

And  that  there  has  been  no  opposition  to,  nor  appeal  from  the  said 
judgment,  to  my  knowledge. 

In  testimony  whereof  I  have  delivered  the  present  certificate  to  serve 
and  avail,  according"  to  law. 

Paris,  September      1902.  Dubourg. 


JUDGMENT  OF  MARCH  8,  1889  (COURT  OF  APPEALS  OF  PARIS), 
DECLARING  THE  CIVIL  CHARACTER  OF  THE  OLD  PANAMA  COM- 
PANY. 


(This  document  is  very  long,  containing  a  recital  of  the  proceedings 
below,  briefs,  arguments,  etc.  Only  the  concluding  part  is  here 
given,  the  remainder  being  on  file,  in  French,  in  the  Department  of 
Justice.) 

The  court,  after  having  heard  at  the  session  of  March  5,  instant,  as 
to  their  respective  propositions  and  arguments, 

Denier,  advocate  of  Brunet,  liquidator  of  the  Universal  Company  of 
the  Interoceanic  Canal  of  Panama,  assisted  by  Dumas,  solicitor; 

Crarieux,  advocate  of  the  Company  of  Public  Works  and  Construc- 
tions, assisted  by  Dethemont,  solicitor; 

Levasseur,  advocate  of  Menier  Mehut,  assisted  by  Durnerin,  solic- 
itor, 

As  well  as  the  propositions  of  M.  Manuel,  advocate-general; 

And  after  having  deliberated  according  to  law, 

The  announcement  of  the  decree  was  postponed  until  this  day. 

Passing  as  well  upon  the  appeal  interposed  by  the  liquidator  of  the 
Universal  Company  of  the  Interoceanic  Canal  of  Panama  against  the 
Company  of  Public  Works  and  Constructions,  from  the  judgment  of 


EXHIBIT  8. 


[Taken  from  the  minutes  of  the  clerk's  office  of  the  court  of  appeals  of  Paris.] 


PANAMA  CANAL  TITLE. 


99 


the  tribunal  of  commerce  of  the  Seine  of  the  18th  February,  1889, 
as  upon  the  intervention  of  Menier  Mehut; 

No  complaint  of  nullity  or  objection  of  inadmissibility  having  been 
submitted  or  contended  for  as  against  the  appeal; 

Considering  that  hy  the  judgment  of  18th  February,  1889,  the  tri- 
bunal of  commerce  of  the  Seine  declared  itself  competent  to  pass  upon 
the  demand  of  the  Company  of  Public  Works  and  Constructions 
against  the  Panama  Company,  and  decided  that  this  company  is  com- 
mercial; 

That  a  previous  decision  of  the  civil  tribunal  attributed,  on  the  con- 
trary, to  this  company  the  civil  character; 

Considering  that  the  civil  or  commercial  character  of  the  company 
depends  exclusively  upon  the  object  of  the  company  and  not  upon  the 
particular  form  which  it  has  pleased  the  parties  to  give  it; 

That  this  is  so,  even  when  the  parties  have  employed  a  form  which, 
like  that  of  an  anonymous  company,  is  more  especially  affected  by 
companies  of  commerce; 


way  of  bonds,  do  not  constitute  a  method  of  appeal  (to  the  public), 
which  is  exclusively  reserved  to  companies  of  commerce,  and  which 
can  not  be  employed  except  upon  condition  of  being  submitted  to  the 
commercial  jurisdiction; 

That  it  is  proper  to  examine  the  object,  and,  consequently,  to  inquire 
into  the  legal  character  of  the  anonymous  interoceanic  company  of 
Panama; 

Considering  that,  according  to  the  terms  of  the  law  of  the  Congress 
of  May  18,  1878,  the  Government  of  the  United  States  of  Colombia 
conceded  to  an  international  civil  company  the  exclusive  privilege  of 
opening  across  its  territory  a  maritime  canal  between  the  two  oceans, 
with  power  to  constitute  within  two  years  a  universal  anonymous 
company  charged  with  its  construction; 

That  article  2  of  the  by-laws  of  the  company  thus  constituted 
states  that  the  object  of  the  company  is: 

First.  The  constitution  of  a  maritime  canal  on  a  large  scale. 

Second.  The  operation  of  said  canal  and  divers  enterprises  belong- 
ing to  it. 

Third.  The  construction  and  operation  of  all  lines  of  railroad  that 
the  company  ma}T  think  well  to  construct  or  buy  in  the  neighborhood 
of  the  canal  for  the  good  of  the  enterprise. 

Fourth.  The  exploitation  of  the  lands  granted  and  of  the  mines  in 
them, 

The  whole  under  the  clauses  and  provisions  of  the  law  of  Congress; 

That  from  these  provisions,  as  well  as  from  the  acts  of  concession 
and  the  by-laws  of  the  concessionary  company,  it  appears  that  the 
principal  end  contemplated  by  the  parties  was  the  opening  of  a  navi- 
gable way  between  the  two  seas;  that  is  to  say,  the  execution  of  pub- 
lic works  of  general  interest  tending  to  have  for  a  result  the  putting 
into  value  immovable  property  making  part  of  the  public  land  of  the 
State; 

That  the  fact  that  a  company  has  been  subrogated  for  a  limited  time 
to  the  rights  of  the  State  can  not  change  the  nature  of  the  enterprise 
and  take  away  the  civil  and  immovable  property  character  which  it 
would  undoubtedly  have  preserved  if  the  Government  of  Colombia 
had  taken  charge  of  its  direction; 


That  the  division  of  the 


•ital  into  shares,  and  loans  by 


LOO 


PANAMA   CANAL  TITLE. 


That  it  is  proper  to  examine  whether  the  primitive  character  and 
principal  object  of  the  concessionary  company  were  modified  by  other 

causes: 

In  the  first  place,  the  distinction  proposed  by  the  lower  judges 
between  the  construction  and  operation  of  the  canal  should  be  con- 
demned. 

From  the  point  of  view  of  the  object  of  the  company  those  two 
businesses  go  together. 

That  the  operation  consists  principally  in  the  reception  of  payments 
which  are  nothing  but  the  necessary  remuneration  of  the  capital 
invested  for  the  construction  and  the  indispensable  means  for  realizing 
on  that; 

That  the  distinction  between  the  operation  and  the  construction 
being  left  out.  it  remains  to  examine  under  what  circumstances  both 
of  them  are  to  be  effected  in  the  future; 

That  it  is  maintained  that  by  the  terms  of  article  2  of  the  by-laws 
above  referred  to  the  company  performs  an  act  of  commerce: 

First.  As  undertaker  of  the  constructions. 

Second.  As  undertaker  of  transportations. 

Third.  As  exploiting  the  mines  and  lands  granted. 

On  the  first  point,  considering  that  the  company  is  not  charged  by 
the  act  of  concession  merehT  to  construct  a  canal  which  it  is  to  abandon 
to  the  State  at  the  end  of  the  work: 

That  a  contract  has  been  made  from  which  it  results  that  the  company 
charged  with  its  construction  is  to  remain  in  possession  and  benefit 
from  the  products  of  operation  during  ninety-nine  years,  dating  from 
the  day  of  its  opening; 

That  thus  it  constructs  not  in  reality  for  the  benefit  of  another,  but 
for  its  own  benefit,  and  in  its  own  interest  as  well  as  for  that  of  the 
Colombian  Government  whose  associate  it  remains; 

That  it  should,  consequently,  be  assimilated  to  an  individual  con- 
structing for  himself,  and  in  his  own  proper  interest: 

That  an  enterprise  done  under  these  conditions  can  not  be  considered 
a  commercial  act  under  the  terms  of  articles  632  and  633  of  the  Code 
of  Commerce. 

On  the  second  point,  considering  that  the  Interoceanic  Company  of 
Panama  does  not  propose  to  transport  travelers  and  merchandise  by 
land  or  by  water  as  a  carrier  and  railroad  company  or  a  steamboat 
company: 

That  the  principal  object  and  the  characteristic  object  of  the  com- 
pany is  not  transportation,  but  a  way  destined  for  transportation  on 
which  will  be  received  dues  of  toll; 

That  these  rights  or  receipts  will  be  received  on  a  tariff  fixed  by  the 
law  of  concession  by  virtue  of  a  delegation  of  the  sovereign  State: 

This  latter  does  not  perform  an  act  of  commerce,  if  it  receives  them 
itself; 

That  it  is  the  same  as  to  the  company  which  is  regularly  substituted 
for  it; 

That,  finally,  the  receipt  of  dues  or  tolls  on  canals  does  not  consti- 
tute in  itself  an  act  of  commerce  subject  to  the  consular  jurisdiction; 

That  it  is  vainly  objected  that  paragraph  3,  article  2,  of  the  by-laws 
provides  for  the  construction  and  operation  or  purchase  of  a  railroad 
line  in  the  neighborhood  of  the  canal  for  the  good  of  the  enterprise; 

That  it  results  from  the  express  terms  of  this  paragraph,  as  from  the 


PANAMA  CANAL  TITLE. 


101 


general  spirit  of  the  company's  by-laws,  that  it  is  only  for  the  object 
of  favoring  the  principal  enterprise  and  assuring  its  execution  that 
the  accessory  and  assistant  of  a  railroad  called  auxiliary  has  been  con- 
templated in  the  contract; 

That  this  can  not  have  the  effect  to  modify  the  primordial  and  essen- 
tial character  of  the  company; 

That  if  it  is  true  that  the  lnteroceanic  Company  has  bought  the 
greater  part  of  the  shares  of  the  railroad  from  Panama  to  Colon, 
which  serves  not  only  for  the  works  of  the  company  but  effects  the 
transportation  of  travelers  and  merchandise  from  one  sea  to  the  other, 
the  documents  produced  to  the  court  establish  that  this  company 
remains  distinct  from  the  canal  company; 

That  it  possesses  a  director-general  of  administration  and  accounts 
of  its  own; 

That  its  company  seat  is  in  New  York; 

That  its  juridical  individuality  has  not  disappeared,  to  confound  itself 
with  that  of  the  canal  company; 

And  that  such  would  not  be  the  effect  of  the  holding  by  the  latter 
of  a  number  more  or  less  considerable  of  shares,  varying  according  to 
the  changes  of  the  financial  situation. 

On  the  third  point: 

Considering  that  the  nation  of  Colombia  has  given  to  the  Inter- 
oceanic  Company  as  an  aid  for  the  execution  of  the  work  500,000  hec- 
tares of  public  land  with  the  mines  they  may  contain; 

The  exploitation  of  this  domain,  not  yet  commenced,  can  not  in  any 
event  constitute  a  commercial  enterprise; 

That  there  is  only  in  effect  the  putting  into  value  of  immovables 
and  mines; 

That  admitting  that  the  division  and  the  sale  of  the  whole  or  part 
of  the  domain  by  the  establishment  of  alternate  lots  on  the  coasts  of 
the  canal  and  seas  presents  the  characteristics  of  a  speculation,  besides 
being  lawful  and  contemplated  by  the  concession,  it  does  not  consti- 
tute an  act  of  commerce,  but  an  act,  or  series  of  acts,  of  dealing  with 
immovable  property,  the  character  of  which  is  purely  civil; 

That  if  the  statements  of  articles  632  and  633  concerning  acts  of 
commerce  are  not  restricted,  they  should  not  be  extended  by  analogy 
to  objects  not  of  the  same  nature;  that  is  to  say,  immovable  in  their 
essence; 

That  they  exclude,  necessarily,  operations  concerning  immovables 
and  those  concerning  mines,  which  are  ruled  by  special  law; 

That  for  want  of  general  arguments,  taken  from  article  2  of  the  by- 
laws, it  is  maintained  that  a  commercial  character  of  the  lnteroceanic 
Company  can  be  demonstrated  from  divers  and  detailed  provisions 
contained  in  the  act  of  concession; 

That  there  is  especially  pointed  out  the  faculty  given  to  the  compan}7 
to  receive  payments  for  repair,  pilotage,  towage,  deposit,  and  storing, 
and  the  obligation  accepted  by  it  to  transport  on  the  line  of  the  canal 
the  agents  of  the  Colombian  Government; 

Considering  that  these  divers  provisions  and  receipts,  of  insignificant 
importance  in  comparison  with  that  of  toll,  which  is  connected  with 
them,  have  only  an  incidental  character; 

That  they  belong  to  the  principal  object  of  the  enterprise  without, 
however,  absorbing  it  or  modifying  it; 

That  if,  as  the  result  of  circumstances  not  yet  arisen,  the  company 


102 


PANAMA  CANAL  TITLE. 


»nould  be  required  to  perform  some  acts  of  a  commercial  nature,  it 
would  not  result  that  the  primordial  and  essential  character  of  the 
civil  company  constituted  by  the  by-laws  would  be  annihilated; 

That  the  company  would  find  itself  only  placed  in  the  situation  of 
an  individual,  not  a  merchant,  who,  as  the  result  of  certain  acts  con- 
templated by  the  Code  of  Commerce,  might  become,  as  an  exceptional 
matter,  subject  to  the  tribunal  as  to  the  exception. 

As  for  what  concerns  the  transportation  on  the  Isthmus  of  agents  of 
the  Colombian  Government; 

Considering  that  the  obligation  to  make  that  transportation  gratui- 
tously was  imposed  upon  the  company  by  article  N  of  the  concession; 

That  it  is  one  of  the  charges  for  that  concession,  and  not  an  act  of 
commerce; 

That  from  the  preceding  considerations,  it  arises  that  the  Inter- 
oceanic  Company  of  Panama  is  not  in  fact  either  a  constructor  or 
undertaker  of  work  for  the  benefit  of  another; 

That  whatever  may  be  the  character  of  certain  accessory  clauses  and 
detailed  provisions  inserted  in  the  by-laws  and  in  the  act  of  concession, 
the  principal  and  dominant  object  of  the  company  is  not  commercial; 

That  its  legal  character  is  that  of  a  civil  company  concerned  with 
immovables,  subjected,  as  all  other  companies  concerned  with  immov- 
ables, mines,  or  canals,  to  the  jurisdiction  of  ordinary  law; 

That  it  is  of  no  consequence  that  divers  proceedings  were  introduced 
heretofore  before  the  tribunal  of  commerce  without  any  exception 
having  been  taken  as  to  its  jurisdiction; 

That  it  is  established  that  a  great  number  of  other  litigations  have 
already  been  taken  before  the  civil  tribunal; 

And  that  the  exception  for  want  of  jurisdiction  ratione  materiae  is  a 
matter  of  public  order  and  can  always  be  invoked; 

For  these  reasons,  and  without  its  being  necessary  to  pass  upon  the 
objection  of  inadmissibility  interposed  to  the  intervenor; 

Annuls  the  judgment  of  the  tribunal  of  commerce  of  the  Seine  of  the 
18th  February,  1889; 

Deciding  anew,  discharges  the  appellant  from  the  condemnations  and 
dispositions  of  which  he  complains; 

Receives  Menier  Mehut  as  intervenor  in  the  proceeding; 

Declares  that  by  reason  of  its  principal  object,  the  company  of  the 
Interoceanic  Canal  of  Panama  is  a  civil  company  concerned  with 
immovables; 

Declares  that  the  tribunal  of  commerce  was  without  jurisdiction  of 
the  demand  against  it  by  the  Company  of  Public  Works  and  Con- 
structions; 

Orders  the  parties  before  the  proper  tribunal  for  the  matter  to  be 
passed  upon; 

Dismisses  the  Panama  Company,  the  Company  of  Public  Works  and 
Constructions,  and  Menier  Mehut  as  to  all  other  demands,  exceptions, 
and  propositions; 

Orders  the  restitution  of  the  fines  to  the  Panama  Company ; 

Condemns  the  Company  of  Public  Works  and  Constructions  in  the 
costs  in  the  first  instance  and  appeal; 

Condemns  Menier  Mehut  for  the  costs  of  his  intervention; 

Settles  the  costs  of  the  Company  of  Public  Works  and  Constructions 
in  the  intervention  at  ; 


PANAMA   CANAL  TITLE. 


103 


Those  of  the  Panama  company  in  the  first  instance  sit  

On  appeal  at  

On  the  intervention  at  

These  comprising  the  dues  of  qualification,  record,  of  the  minutes, 
cost  and  notification  of  the  present  decree; 

Allowance  made  in  the  said  expenses  for  fees  of  Bethemont  and 
Dumas,  solicitors,  who  have  required  this,  upon  their  showing  what 
taay  be  due  them; 

Done  and  pronounced  in  the  court  of  appeals  of  Paris,  Friday, 
May  8,  1889,  at  the  public  session  of  the  first  chamber,  where  were 
present  and  sitting: 

M.  de  Viefville,  president. 

MM.  de  Laborie,  Merlier,  Gues,  Caze,  Robert,  and  Pilet  des 
Jardins,  counsellors. 

In  the  presence  of  M.  Harel,  substitute  for  the  general  attorney. 

Holding  the  pen,  Me.  Pioge,  clerk  of  the  session. 

The  minutes  of  the  present  decree  have  been  signed  by  the  president 
and  by  the  clerk  of  the  session. 

On  the  margin  is  to  be  read:  Registered  at  Paris,  March  13,  1889, 
page  83,  case  19.   Received  37 francs  90 centimes.    (Signed:)  Druilhet. 

Copy  conforming  to  the  original:  the  chief  clerk. 

Adm.  Loichemolle. 

Examined  for  the  authentication  of  the  signature  of  Me.  Loichemolle, 
clerk  of  the  court  of  appeals  of  Paris,  on  the  opposite  page. 
Paris  the  26th  of  August.  1902. 
For  the  first  president: 

Edm.  Aubry. 


EXHIBIT  9. 

CERTIFICATES  OF  AUGUST  21-30,  1902,  BY  THE  LIQUIDATOR,  CONCERN- 
ING JUDICIAL  AND  OTHER  MORTGAGES,  PLEDGES  OF  PERSONAL 
PROPERTY,  AND  LIENS  IN  GENERAL.    (SEE  ALSO  EXHIBIT  12.) 

Q.  (a)  What  proceedings  in  courts,  including  the  court  of  cassation, 
have  taken  place  since  those  set  forth  in  the  sixth  report  of  the  liqui- 
dator % 

A.  In  France  two  proceedings  had  not  yet  received  final  settlement 
at  the  date  of  the  sixth  report  of  the  liquidator,  November  14,  1900: 

1.  The  affair  of  Gautron,  liquidator,  against  the  council  of  manda- 
taires  of  the  civil  company  for  the  redemption  of  new  bonds,  third 
series  (issue  of  March  14,  1888).  (See  sixth  report,  pp.  18  to  21.)  The 
court  of  appeals  of  Paris,  by  decree  of  July  17,  1901,  has  confirmed 
the  judgment  in  favor  of  the  liquidator.  The  council  of  mandataires 
has  appealed  to  cassation  against  that  decree. 

2.  "The  affair  of  Von  Berg.  (See  sixth  report,  p.  21.)  Messrs.  Von 
Berg  &  Co.  claimed  from  the  liquidator  the  sum  of  190,577  francs, 
with  interest  from  May  5,  1888,  as  the  price  of  a  steam  excavator,  of 
a  transporter,  and  accessory  implements,  etc.  By  judgment,  dated 
August  7,  1901,  the  civil  tribunal  of  the  Seine  condemned  the  liqui- 
dator to  pay  Messrs.  Von  Berg  &  Co.  only  the  sum  of  6,000  francs. 
On  November  15,  1901,  Messrs.  Von  Berg  &  Co.  appealed  from  that 


104 


PANAMA  CANAL  TITLE. 


decision.  The  matter  is  pending  before  the  court  of  appeals  of 
Paris. 

Paris,  August  21,  1902. 

Gautron, 

The  Liquidator  of  the  Universal  Company 

of  the  Interoceanic  Canal. 

Q.  (7j)  What  mortgages,  judicial  or  other,  affected  the  immovable  prop- 
erty of  the  canal  company  on  July  1,  1893?  What  has  been  done 
since  with  regard  to  them  by  the  mandataire,  or  the  creditors,  or  the 
bondholders  in  France  or  in  Colombia? 

A.  On  the  1st  of  July,  1893,  the  Universal  Company  of  the  Inter- 
oceanic Canal  represented  by  the  liquidator  did  not  possess  any  immov- 
able property  in  France.  In  Colombia,  the  immovable  property  which 
it  possessed  on  the  Isthmus  has  not  been  the  object  of  any  execution 
proceeding. 

Paris,  August  21,  1902. 

"  Gautron, 

The  Liquidator  of  the  Universal  Company 

of  the  Interoceanic  Canal. 

Q.  (c)  What  mortgages,  attachments,  or  other  equivalent  things 
existed  on  July  1,  1893,  as  to  personal  property  I 

A.  The  liquidator  has  stated  in  the  fourth  report,  pages  15  to  21, 
the  situation  of  the  movable  assets  of  the  old  company  on  July  1,  1893. 
The  lottery  bonds,  unissued  and  remaining  in  his  hands,  were  seized 
by  Messrs.  Baudouin,  Piza  Lindo  &  Co.,  contractors  of  the  old  com- 
pany, by  divers  bondholders,  and  by  the  registration  office. 

Thirty  thousand  five  hundred  shares  of  the  Panama  Railroad  Com- 
pany were  pledged  to  divers  contractors  of  the  old  company  to 
guarantee  the  payment  of  the  sums  due  for  work  done  after  the 
dissolution  of  the  Universal  Company  of  the  Interoceanic  Canal. 
Messrs.  Baudouin,  Piza  Lindo  &  Co.  took  at  New  York  measures  to 
secure  their  rights  which  pa  raized  the  rights  of  the  liquidator  as  to 
the  Panama  Railroad  Company. 

The  fourth  report  indicates,  on  pages  16  et  seq.,  how  the  liquidator 
successfully  obtained: 

1.  The  release  from  the  seizures  at  the  instance  of  Messrs.  Baudouin, 
Piza  Lindo  &  Co.  and  divers  bondholders,  of  the  lottery  bonds  remain- 
ing on  hand; 

2.  The  abandonment  of  the  measures  taken  by  Messrs.  Baudouin, 
Piza  Lindo  &  Co.  as  to  the  shares  of  the  Panama  Railroad  Company; 

3.  The  return  by  the  contractors  of  the  30,500  shares  of  the  Panama 
Railroad  Company  which  had  been  given  to  them  as  a  pledge. 

Tables  annexed  to  the  present  note  show  the  sums  paid  to  divers 
creditors  of  the  old  company  in  order  to  render  absolutely  free  the 
movable  assets  of  the  liquidation. 

It  is  proper  to  add  that  the  registry  office  seized  the  lottery  bonds 
remaining  on  hand,  in  order  to  secure  the  payment  of  the  stamp  and 
transfer  taxes  upon  the  shares  and  bonds  of  the  old  company.  The  said 
dues  amounted  to  the  sum  of  5,185,595  francs,  35  centimes.  The  law  of 
July  1,  1893,  article  12,  remitted  that  debt  of  the  liquidation.  (See 
third  report,  p.  177.)    Consequently  the  liquidator  obtained  from  the 


PANAMA  CANAL  TITLE. 


105 


registry  office  a  release  from  the  seizures  it  had  caused  of  the  lottery 
bonds  remaining  on  hand. 
Paris,  August  21,  1902. 

Gautk<  >\ . 

The  Liquidator  of  the  Univ<rx<il  C<nnpany 

of  the  Interoceanic  Canal, 

Q.  (d)  What  mortgages,  judicial  or  other,  or  attachments  or  other 
equivalent  things,  affecting  the  movable  or  immovable  properly,  have 
come  into  existence  since  July  1,  1893? 

A.  In  France  the  movable  property  of  the  Universal  Company  of 
the  Interoceanic  Canal  represented  by  the  liquidation  lias  not  been  the 
object  of  any  proceedings  in  execution  since  the  1st  of  July,  1893. 
The  liquidation  possesses  no  immovable  property  in  France. 

In  Colombia,  the  liquidator  finds  himself  at  the  present  moment 
in  presence  of  three  proceedings,  the  first  phases  of  which  are  set 
forth  in  the  sixth  report  of  the  liquidator:  The  affair  of  Schuber, 
sixth  report,  p.  23;  the  affair  of  Icaza,  sixth  report,  p.  20;  the  affair 
of  Domingo  Diaz,  sixth  report,  p.  24.    (See  sixth  report,  pp.  23  to  26.) 

In  the  matters  of  Schuber  and  Icaza,  M.  Schuber  caused  to  be  seized 
and  sequestered  the  building  of  the  director  of  the  New  Panama  Canal 
Company;  the  heirs  of  M.  Pablo  de  Icaza  caused  to  be  seized  and 
sequestered  the  building  of  the  company.  At  the  end  of  a  great  num- 
ber of  decisions  upon  contests,  by  the  Colombian  judges — decisions 
which  declared  void  the  seizure  and  sequestration  of  these  immovable 
properties — General  Alban,  governor  of  Panama,  considered  it  for  the 
interest  of  the  Colombian  Government  to  have  established  the  inalien- 
ability of  the  two  immovable  properties  seized,  which  by  the  terms 
of  the  act  of  concession  (Law  28  of  May  18,  1878,  article  23)  were 
to  return  to  the  Colombian  Government  in  case  of  the  forfeiture  of 
the  concession.  Consequently,  on  October  5,  1901,  the  governor 
instructed  the  official  attorney  at  the  tribunal  of  Panama  to  introduce, 
in  the  name  of  the  nation,  a  tierce  opposition  of  exclusion  as  to  the 
immovables  seized. 

A  Colombian  judge  declared  that  opposition  inadmissible,  basing 
his  decision  on  the  fact  that  General  Alban  did  not  represent  the 
Colombian  Government.  As  a  matter  of  fact,  the  seizure  and  seques- 
tration of  the  two  immovables  continues,  but  the  liquidator  has  been 
informed,  by  a  letter  of  March  24,  1902,  that  the  Government  of 
Bogota  ordered  the  official  attorney  at  Panama  to  introduce  a  new 
tierce  opposition  in  the  name  of  the  nation.  The  order  as  to  this 
tierce  opposition  was  inserted  in  the  Official  Journal.  Finally,  as  a 
result  of  that  tierce  opposition,  the  superior  tribunal  of  Panama  by  :i 
decision  of  May  7,  1902,  setting  aside  its  previous  decision,  suspended 
the  judgment  which  established  the  seizure  and  sequestration  and 
ordered  notification  to  be  given  to  the  liquidator. 

If,  as  there  is  reason  to  hope,  the  Colombian  Government  causes  the 
immovables  of  the  company  to  be  declared  inalienable  and  nonseizable, 
the  liquidator  will  have  only  to  await  the  notifications  ordered  h\  the 
superior  tribunal. 

Affair  of  Domingo  Diaz,  sixth  report,  p.  21.  The  supreme  court  of 
Bogota  rejected  the  application  en  cassation  presented-  by  the  liquida- 
tor.   An  expert  examination  being  necessary  to  determine  the  lands 


106 


PANAMA  CANAL  TITLE. 


in  regard  to  which  the  recovery  of  M.  Diaz  will  be  founded,  the  liqui- 
dator reserves  the  right  to  defend  before  the  experts  the  rights  of  the 
Universal  Company  of  the  Interoceanic  Canal. 

In  a  letter  of  February  1,  1902,  the  advocate  of  the  liquidator  in- 
formed him  that  there  was  reason  to  believe  that  the  papers  in  the 
Domingo  Diaz  matter  were  lost  at  the  time  of  the  attack  by  the 
Colombian  revolutionists  upon  the  postal  courier  between  Bogota  and 
Honda. 

In  any  event,  in  the  three  affairs  of  Schuber,  Icaza,  and  Domingo 
Diaz,  the  liquidator  is  ready  to  take  the  steps,  and  if  need  be  to  make 
the  sacrifices,  necessary  to  prevent  the  Government  of  the  United 
States,  if  it  shall  acquire  the  canal,  from  being  disturbed  in  the  enjoy- 
ment of  the  immovable  properties  which  will  be  ceded  to  it. 

Paris,  August  21,  1902. 

Gautron, 

The  Liquidator  of  tlie  Universal  Company 

of  the  Interoceanic  Canal. 

Q.  (e)  What  judicial  or  other  mortgages,  attachments,  liens,  or  the 
like  exist  in  favor  of  creditors,  bondholders,  stockholders,  or  the 
liquidator  at  the  present  time? 

A.  There  exists  at  the  present  time  no  mortgage,  seizure,  pledge, 
or  other  thing  for  the  benefit  of  creditors,  bondholders,  or  shareholders 
upon  the  assets  of  the  liquidation. 

Paris.  August  21,  1902. 

Gautron, 

The  Liquidator  of  the  Universal  Company 

of  the  Interoceanic  Canal. 

Q.  (f)  What  has  become  of  the  Donnadieu  affair  of  1898? 

A.  As  has  been  stated  in  the  sixth  report,  pages  17  and  18,  the 
the  claim  of  M.  Donnadieu  to  have  communicated  to  him  by  Messrs. 
Lemarquis,  mandataire  of  the  bondholders,  and  Gautron,  liquidator 
of  the  Universal  Company  of  the  Interoceanic  Canal,  the  documents 
useful  for  an  action  to  obtain  payment  of  the  company  assets,  espe- 
cially the  register  showing  transfer  of  the  shares  of  the  said  company 
(Universal  Company  of  the  Interoceanic  Canal),  was  denied  by  a  judg- 
ment of  the  civil  tribunal  of  first  instance  of  the  Seine,  dated  March 
17,  1898.    (See  sixth  report,  p.  79.) 

This  judgment  was  confirmed  by  a  decree  of  the  court  of  appeals  of 
Paris  of  August  4,  1898.  (Sixth  report,  p.  77.)  This  decree  was 
executed  and  has  become  final. 

Paris,  August  21,  1902. 

Gautron, 

The  Liquidator  of  the  Universal  Company 

of  the  Interoceanic  Canal. 

Q.  (g)  Why  was  it  necessary  to  have  the  law  of  June  8,  1888,  con- 
cerning lottery  bonds  ? 

A.  The  circumstances  in  which  the  old  Panama  Company  solicited 
the  authorization  to  issue  lotteiw  bonds  are  set  forth  in  the  first  report 
of  the  liquidator,  pp.  6  and  7. 

The  last  loans  proposed  to  the  public  had  partially  failed.    On  July 


PANAMA  CANAL  TITLE. 


1()7 


26,  1887,  the  company  hud  oil'ercd  for  subscription  500,00n  bonds,  6  per 
cent,  at  44(>  francs,  repayable  at  1,0(K)  francs.  The  public  subscribed 
only  258,887  bonds.  On  March  14, 1888,  the  company  put  out  350,000 
bonds  at  460  francs,  payable  at  1,000  francs.  The  public  subscribed 
only  1  L2,483  bonds. 

The  company  thought  that  a  loan  would  have  more  chance  of  success 
if  it  was  presented  in  the  form  of  bonds  giving  a  right  to  considerable 
prizes,  the  payment  of  which  would  be  guaranteed  by  a  special  arrange- 
ment. But  in  France  lotteries  are  prohibited,  generally,  by  a  law  of 
May  21,  L836,  by  article  1  thus  worded:  "Lotteries  of  all  kinds  are 
prohibited." 

A  special  law,  analogous  to  those  that  have  authorized  the  city  of 
Paris,  the  Credit  Foncier  of  France,  and  the  Suez  Canal  Company  to 
issue  lottery  bonds,  was  necessary  to  get  rid  for  the  Panama  Company 
of  the  prohibition  decreed  by  the  law  of  May  21, 1836.  The  law  which 
authorized  the  Panama  Company  to  issue  lottery  bonds,  yoted  by  the 
Chamber  of  Deputies  and  the  Senate,  was  promulgated  on  June  8, 1888. 

Paris,  August  21,  1902. 

Gautron, 

The  Liquidator  of  the  Universal  Company 

of  the  Inter  oceanic  Canal. 

Q.  (h)  Haye  there  been  any  other  bond  issues  authorized  by  laws 
specially  passed  for  that  purpose,  and  has  there  been  other  authority 
granted  to  the  old  company;  and  was  there  ever  any  authorization  or 
surveillance  of  the  old  company  by  the  public  administration? 

A.  No  other  issue  of  bonds  of  the  Universal  Company  of  the  Inter- 
oceanic  Canal,  represented  by  the  liquidator,  has  been  authorized  by 
a  special  law.  The  only  authorizations  are  those  which  haye  been 
accorded: 

1.  By  the  law  of  June  6,  1888,  to  the  Universal  Company  of  the 
Interoceanic  Canal,  then  solvent,  to  issue  lotteiy  bonds. 

2.  By  the  law  of  July  1,  1889,  to  the  liquidator  of  the  Universal 
Company  of  the  Interoceanic  Canal,  to  negotiate  the  lottery  bonds 
without  limitation  of  price  and  without  interest. 

The  Universal  Company  of  the  Interoceanic  Canal,  represented  since 
February  4,  1889,  by  the  liquidator,  being  a  company  absolutely  pri- 
vate, the  Government  (administration)  has  no  right  to  exercise  any  sur- 
veillance. When  the  Universal  Compaivy  was  solvent,  it  was  subject 
to  no  control  b}T  the  Government  (administration),  but  the  judicial 
power  had  the  right  to  repress  infractions  of  its  by-laws,  and  of  the 
laws  governing  companies,  which  it  might  haye  committed.  The 
judicial  power  never  had  to  make  use  of  that  right. 

Since  the  dissolution  of  the  company  the  liquidator,  representing 
the  Universal  Company  of  the  Interoceanic  Canal,  finds  himself  placed 
under  the  control  of  the  civil  tribunal  of  the  Seine  which  appointed 
him  and  has  had  the  power  to  dismiss  him.  The  law  of  July  1,  1893, 
has  specially  regulated,  as  concerns  the  liquidation  of  the  Universal 
Company  of  the  Interoceanic  Canal,  the  conditions  of  that  control. 

Paris,  August  21,  1902. 

Gautron. 

T/o  Liquidator  of  the  Universal  Company 

of  the  Interoceanic  Canal. 


ins 


PANAMA  CANAL  TITLE. 


Definitive  settlement  of  the  accounts  o  f  the  contractors. 


Names  of  contractors, 


American  Contract- 
ing and  Dredging 
Company. 


Baratoux,  Letellier 
&Co. 


E.  Jacob  


Artigue  Sondereg- 
ger  &  Co. 


(J.  KifTcl 


Sums  due 

after 
agreement. 


Francs. 
2, 279, 587. 70 


2.269,009.33 


2, 126, 3G6. 01 


1,921, 004.  SN 


7,147,264.33 


Dates  of  agreements 
and  of  the  ap- 
proval of  the 
agreements. 


Agreement  of  Dec. 
31,  1890,  prior  to 
the  law  of  Jul v  1, 
1893. 


Agreement  of  Aug. 
8,  1894;  approved 
Aug.  10. 


Agreement  of  Aug. 
8,  1894;  approved 
Aug.  9. 


Agreement  of  Aug. 
14,1894;  approved 
Aug.  17. 


Adjustment  <>f  Jan. 
26, 1894;  approved 
June  29.  1894. 


Dates  and  nature  of  the  payments  effected. 


Payment  of  Jan.  10,  1891:  Francs. 

Cash   1,600,000.00 

Turning  over  of  dividends 

on  3,000  shares  P.  EL.  K. . .     217, 037.  70 
7,500  lotterv  bonds,  at  75 

francs  each   562, 500. 00 

Total   2, 279,  537.  70 

Payment  of  Nov.  29, 1894: 

18,270    lottery   bonds,  at 

124. 18 1  francs  each   2,268,905.03 

Cash   103.70 

Total   2,  269, 009.  33 

Payment  of  Nov.  29, 1894: 

17,122    lotterv   bonds,  at 

124.18}  francs   2, 126, 338. 37 

Cash   27.64 

Total   2, 126, 366. 01 

Payment  of  Nov.  29, 1894: 

15,657    lottery   bonds,  at 

122. (is?  francs   1,920,918.18 

Cash   86. 70 

Total   1,921,004.88 

Payment  of  Nov.  29, 1894: 

57,178  lottery  bonds,  at  125 

francs   7,147,250.00 

Cash   14.83 

Total   7.147.264.33 


As  to  Messrs.  Vignaud,  Barbaud,  Blanleuil&  Co.,  they  claimed  of  the 
liquidation:  (1)  Payment  for  their  work,  1,336,154 francs;  (2)  damages, 
15,066,000  francs;  (3)  the  reimbursement  of  the  guarantee  funds  held 
by  the  company,  1,283,547.20  francs;  altogether,  17,685,701.20  francs, 
and  the  restoration  of  their  guarantee  deposit,  consisting  of  37,748 
francs  of  3  per  cent  French  State  annuit\T  (rente),  with  arrears. 

On  its  side,  the  liquidation  presented  itself  as  a  creditor  of  those 
contractors  on  account  of  failure  to  carry  out  their  contracts,  claiming 
in  return  a  sum  of  8,658,705.65  francs. 

An  agreement  dated  March  7,  1896,  approved  by  the  tribunal  of 
commerce  (judgment  of  March  23,  1896),  and  by  the  civil  tribunal  of 
the  Seine  (judgment  of  May  22, 1896),  has  put  the  parties  into  accord. 
The  contractors  have  only  entered  into  possession  of  their  guaranty 
of  37,748  francs  of  rentes,  and  have  abandoned  all  their  other  preten- 
sions. The  liquidation,  on  its  side,  renounced  its  claims,  on  condition 
that  it  should  remain  in  possession  of  the  back  receipts  obtained  by  it 
on  that  guarantee  fund,  to  wit,  84,933  francs,  and  that  it  should  receive 
the  back  receipts  obtained  by  the  Caisse  of  Deposits  and  Consignments 
on  the  guaranty  since  the  day  of  the  deposit,  to  wit,  188,740  francs. 

This  arrangement  was  carried  into  effect  on  June  6,  1896. 

Paris,  August  22,  1902. 

Gautron, 

The  Liquidator'  of  the  (niversal  Company. 


PANAMA    CANAL  TITLE. 


109 


List  of  creditors  obtaining  judgments  against  the  /ignidation  of  the  Universal  Company  of 

the  Interoceanic  Canal. 


Names  of  the 
creditors. 


ItONDIIOI.DKRS. 


Date  of  the  judgments 
and  designation  of 
the  tribunal. 


Kind  of  indebtedness. 


Lanrilliard   Civil  tribunal  of  the 

Seine;  judgment  of 
June  26,  1890. 
...do  


(i.  Henry 


Veuve  Mille 


Mllc.Joreau ., 

M.  Roger   

M.  Francois. . 
M.  Donnadieu 
Beirsof  Vaillant 

M.  Denovare  

M.  Doumic  

p.  Pichot  

M.  Noyelle  

M.  Delaplace  . .. 

If.  Laporte  

If.Gesnys  

M.  IMlon  

Mine.  Vve.  Le- 

pecheux. 

Iff.  Dubar  

M.  Raffard  

If.  Bonhoure  ... 
Mlle.Tanies .... 
Bf.Chappellier.. 

If.  Estagerie  

Mme.  Vve.  Sar- 

razin. 

M.  Sassier  

Mme.Vve.  Brion 
Mme. Vve.  Petit. 
M.  Jamain  


DIVERS  CREDIT- 
ORS IN  FRANCE. 


Nercam,  con- 
tractor: 


Piza  Lindo  & 
B  a  n  d  o  n  i  n , 
contractors. 


Marolle.  civil 
engineer. 


Muraccioli,  con- 
tractor. 


20  new  bonds,  1st  series. 
Interest  

5  bonds,  4  per  cent  

Due  from  sinking  fund.. 
Interest  

17  bonds,  5  per  cent  

11  bonds,  3  per  cent  

1  bond,  4  per  cent  

Due  from  sinking  fund.. 

Coupons   

Interest  

Total  


Amount  of 
judgments. 


Frames. 
9,  ooo.  oo 

1,631.25 

1,665.00 
29.00 
307. 07 


7, 437.  50 
3, 135.00 
333.00 
215. 12 
9.44 
2,131.50 


13, 261.  56 


Result. 


Paid   10,631.25  francs 
Aug.  25, 1892. 

Paid    2,001.07  francs 
Aug.  27, 1892. 


Paid  Nov.  12,  1892, 
after  an  agreement 
reducing  the  debt 
by  one-fifth,  10,609.20 
francs. 


All  these  individual  suits  and  the  proceedings  resulting  from  them  are  to-day  suspended 

by  reason  of  the  provisions  of  the  lav  of  July  1.  lSi)3.  More  than  that,  by  an  agreement 
of  Oct.  18,  18<J.r,  the  liquidator  obtained  from  the  bondholders,  who  had  instituted  some 
seizure  orders  and  execution  orders,  a  discharge  and  a  desisting  from  their  appeals,  in 
return  for  the  n  unburst  mt  nt  pure  and  simple  of  the  costs,  fees,  owl  outlays  of  flu  pro- 
ceedings of  all  kinds  in  which  they  had  obtained  judgments  against  the  liquidation, 
leaviny  at  their  charge  the  expenses  and  outlays  of  the  proceedings  in  which  they  failed. 
Judgmt  nts  of  the  first  chambe  r  of  the  civil  tribunal  of  the  Seine  since  the  laiv  of  July  1, 
1893,  have  decided  that  the  oppositions  interposed  by  these  bondholders  are  without 
object  and  can  have  no  effect. 


Civil  tribunal  of  the 
Seine;  judgment  of 
Dec.  12,  1889. 


Civil  tribunal  of  the 
Seine;  judgment  of 
Mar.  26,  1890. 


Civil  tribunal  of  the 
Seine;  judgment  of 
May  21,  1890,  judg- 
ment of  June  17, 
1891. 


Civil  tribunal  of  the 
Seine:  judgment  of 
Apr.  11, 1893. 


Work  done  and  damage 
caused. 


Ditching  work 


Work  of  surveying  250,- 
000  hectares  of  land 
granted  by  Colombia. 


Pavment  of  account. 


Francs. 
350,000.00 


a204,970.*76 


405,  705. 00 


3, 880. 15 


Received  366,497francs 
for  principal  and 
interest  from  the 
product  of  the  im- 
movable property, 
46  Rue  Caumartin. 

Received  101,012.10 
francs  from  the  pro- 
ductof  thesaleof  the 
immovable  property 
on  the  Rue  Cau- 
martin, and  90,000 
francs  in  cash  Oct. 
18, 1894. 

By  agreement  of  July 
5,  1892,  M.  Marolle 
consented  to  receive 
300.000  francs  in  pay- 
ment of  all  accounts. 
This  transaction  was 
approved  Julv  13, 
1892,  the  pavment 
made  July  28."  1892. 

These  sums  with  in 
terests  are  together 
4.016  francs;  paid 
Sept.  4,  1894. 


a  Including  the  amount  retained  as  guaranty,  107,023  francs. 


110 


I' AN  AM  A  CANAL  TITLE. 


List  of  creditors  obtaining  judgments  against  the  liquidation  of  the  I'uirrrsal  ('<,,,, jxtmj  oj 
the  Jnteroceanic  Canal — Continued. 


Names  of  the 
creditors. 


Date  of  the  judgments 
and  designation  of 
the  tribunal. 


Kind  of  Indebtedness. 


Amount  of 
judgments. 


Result. 


DIVERS  CRKD- 
ITO  RS  IN 
FRANCE— Ct'd. 

Von  Berg  &  Co.. 


DIVERS  CRED- 
ITORS IN  CO- 
LOMBIA. 

Metivier-Roeh- 
et,  contractor. 


Tanguy,  con- 
tractor. 


Schuber  Bros... 

Domingo  Diaz . . 
Icaza  (the  heirs) 


Civil  tribunal  of  the 
Seine;  judgment  of 
Aug.  7,  1901. 


Trihunal  of  com- 
merce of  Panama; 
judgment  of  July 
16,  1890. 


Trihunal  of  com- 
merce of  Panama; 
judgment  of  May 
19,  1892. 


Superior  trihunal  of 
Panama;  judgment 
of  July  13,  1899. 

Superior  tribunal  of 
Panama;  decision 
of  June,  1899. 

Civil  tribunal  of  the 
first  district  of  Pan- 
ama; judgment  of 
Sept.  6,  1897. 


Price  of  excavator, 
transporter,  and  ac- 
cessory implements. 


Work 


Work  of  excavation: 
contract  rescinded 
Jan.  3,  1888. 


Occupation  by  the  com- 
pany of  a  part  of  the 
property  of  said  Juan 
Diaz  Caballero. 

Occupation  of  a  part  of 
the  property  "  Huerta 
del  Gallo." 

Condemnation  for  the 
benefit  of  the  compa- 
ny of  2  hectares  42 
ares  of  the  property 
"Cerro  de  San  Juan," 
belonging  to  their 
father. 


Francs. 
6,000.00 


Pesos. 
200,001.53 


124,268.33 


28, 339. 67 

(«) 
41,225.00 


The  case  is  on  appeal. 


The  liquidator  having 
appealed  from  the 
ju<lgim  nt.  Bfessng. 
Metivier-Bochet  of- 
fered to  settle.  An 
agreement  approv- 
ed by  the  superior 
tribunal  of  the  dis- 
trict of  Panama 
Sept.  13,  1890,  fixed 
at  98,000  piasters  the 
sum  to  be  paid  bythe 
liquidation  to  settle 
all  accounts,  includ- 
ing interest  and 
costs;  payment 
made  Sept.  19, 1890. 

The  liquidation  set- 
tled with  M. Tanguy 
Julv  23,  1892,  by 
means  of  l'JO.OOO  pe- 
sos deposited  on 
Jan.  3,  1888,  with  M. 
H.  Ehrmann  as 
guaranty  of  the 
compensation  w  hich 
might  be  allowed. 
Transaction  approv- 
ed by  the  superior 
tribunal  of  Panama 
July  25,  1892. 

See  special  note. 


See  special  note. 
Do. 


a  2  square  meters  occupied. 

Certified  to  be  correct,  August  22,  1902. 


Gautron, 

The  Liquidator  of  tlie  Universal  Company. 


PANAMA  CANAL  TITLE. 


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PANAMA   CANAL  TITLE 


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4,950.00 
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TAX  AM  A   CANAL  TITLE. 


113 


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114 


PANAMA  CANAL  TITLE. 


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PANAMA  CANAL  TITLE. 


115 


EXHIBIT  10. 

EXTRACTS  FROM  REPORTS  OF  THE  LIQUIDATOR  SHOWING  LITIGA- 
TION IN  FRANCE  AM)  PANAMA,  PLEDGES,  SETTLEMENTS  WITH 
CONTRACTORS,  ETC. 

[No.  I,  third  part.] 

MANAGEMENT  OF  M.    BRUNET,   FEBRUARY  I,    L889,  TO  MARCH   8,  L890. 

M.  Brunet  came  into  office  on  the  4th  of  February,  1889.  On  this 
date  the  situation  of  the  enterprise  on  the  Isthmus  was  most  critical. 
The  liquidator  found  it  impossible  to  continue  the  works,  the  sudden 
stoppage  of  which,  the  sending  away  of  several  thousands  of  work- 
men might  bring  about  serious  troubles  and  irreparable  disasters. 
The  contractors  could  not  leave  their  workshops  and  reconcile  their 
workpeople  from  one  day  to  the  next,  and  they  were  not  disposed  to 
give  up  these  workshops  and  the  materiel  until  after  their  respective 
situations  had  been  definitely  settled. 

In  short,  the  general  state  of  public  opinion  and  the  disposition 
manifested  in  the  financial  world  at  the  commencement  of  L889  was  of 
such  a  nature  as  to  justify  the  liquidator  in  thinking  that  the  transfer 
of  the  work  to  a  new  company  was  not  absolutely  impossible.  It  was, 
therefore,  necessary  to  proceed  with  a  certain  amount  of  prudence  and 
not  definitively  compromise,  by  too  prompt  action,  the  whole  future  of 
the  undertaking. 

On  the  other  hand,  if  this  favorable  hypothesis  was  not  realized,  it 
was  the  duty  of  the  liquidator  to  attempt  to  take  up  again  and  con- 
tinue the  work  b}T  means  of  the  formation  of  a  company  of  construction. 

The  work  already  done,  the  considerable  quantity  of  materiel 
brought  to  Colombia  and  in  place  for  working,  had  an  incontestable 
value  if  used  to  continue  the  excavation  of  the  canal;  it  would  have 
been  quite  a  different  matter  had  the  scheme  been  definitively  aban- 
doned. Also,  the  works  must  be  taken  care  of,  the  materiel  preserved 
on  a  line  of  plants  of  75  kilometers.  For  this  resources  were  deficient. 
A  seizure  made  by  one  of  the  contractors  on  the  Isthmus,  the  company 
of  public  works  and  constructions,  of  money  in  the  hands  of  two  com- 
panies in  Paris,  debtors  of  the  Panama  Company,  made  sums  of  mone}T 
which  would  have  been  very  useful  to  the  liquidator  unavailable. 

The  liquidator  suddenly  found  himself  deprived  of  large  capital 
which  he  expected  to  have  at  Panama,  and  on  which  he  had  counted 
to  pay  the  necessary  expenses  on  the  Isthmus.  About  the  10th  to  the 
15th  of  February,  1889,  the  directors  of  the  Panama  Company,  con- 
trary to  the  instructions  of  the  liquidator,  had  paid,  under  the  influence 
of  a  panic  and  exaggerated  fears,  to  all  the  employees  working  on  the 
Isthmus,  three-quarters  of  the  indemnity  in  proportion  to  the  length 
of  their  service  which  the  company  were  liable  for  in  the  case  of  dis- 
missal of  the  workmen.  The  total  amount  of  the  payments  thus  made 
was  1,582,000  francs.  However  interesting  may  have  been  the  situa- 
tion of  those  employees,  these  payments  still  left  remaining  the  obli- 
gation to  bring  back  to  France  these  workmen  and  were  untimely, 
occurring  as  they  did  just  at  the  moment  when  the  liquidator  had 
scarcely  at  his  disposal  the  necessary  funds  to  avoid  the  whole  aban- 
donment of  the  scheme  and  the  disastrous  consequences  of  that. 

On  the  other  hand,  the  liquidator  could  not  attempt  in  the  future  to 
form  a  company  for  the  accomplishment  or  finishing  the  canal  without 


116 


l'AJS  AM  A  CANAL  TITLE. 


having  previously  caused  the  formation  of  a  commission  of  exam  inn 
tion  which  would  have  for  its  task  to  render  an  accounl  of  the  value 
of  the  work  accomplished,  of  the  machinery,  materials,  etc. .and  give 
an  opinion  as  to  whether  the  work  could  be  accomplished,  and  under 
what  conditions.  It  was  necessary  to  provide  for  the  expenses  of  such 
an  investigation  and  to  take  steps  during  it  and  afterwards;  if  it  should 
be  necessary,  to  provide  for  the  protection  of  the  work  already  done 
and  for  keeping  in  condition  the  machinery,  etc. 

Aboveall  it  was  important  to  avoid  any  sudden  interruption  of  work 
on  the  Isthmus.  After  the  9th  of  February,  1889,  the  Liquidator  had 
entered  into,  with  four  large  contracting  linns — namely,  MM.  Artigue, 
Sonderegger  &  Co.,  Baratoux,  Letellier  &  Co.,M.  Eiffel,  Jacob  the 
agreements  and  pledges  (nantissements)  prepared  by  the  temporary 
administrators  and  authorized  by  the  tribunal. 

The  same  day  he  gave  them  bills  of  exchange  representing  the  amount 
they  had  earned  since  the  suspension  of  payment  up  to  the  9th  of 
February.  The  work  which  was  to  follow  was  also  to  be  settled  by 
means  of  bills  accepted  by  the  liquidation. 

The  18th  of  February  and  the  23d  of  March,  1889,  the  liquidator 
entered  into  identical  arrangements  with  M.  Slaven,  president  of  the 
American  Contracting  and  Dredging  Company,  in  that  case  the  pledge 
consisting  of  the  deposit  of  3,000  shares  of  stock  of  the  Panama  Kail- 
road  Company,  which  pledge  was  made  in  the  American  manner. 

By  means  of  these  successive  agreements  the  work  has  been  con- 
tinued on  the  Isthmus  up  to  various  dates,  reaching-  from  the  15th  of 
March  to  the  15th  of  May.  L889. 

But  the  Liquidator  had  another  mission  to  fulfill.  In  appointing  him 
the  civil  tribunal  had  given  him  "the  most  extensive  powers,  notably 
to  cede  or  contribute  to  the  new  company  all  or  part  of  the  company's 
assets,  to  make  or  ratify  with  the  contractors  of  the  Panama  Canal  all 
agreements,  having  for  their  object  to  assure  the  continuation  of  the 
work." 

On  the  supposition  that  the  work  was  to  be  soon  resumed,  as  on  the 
supposition  that  the  liquidator  could  only  effect  the  establishment  of  a 
company  to  accomplish  it,  it  was  of  the  highest  interest  to  disengage 
the  liquidation  from  contracts  which  had  been  entered  into  with  bur- 
densome conditions,  with  a  view  to  assure  the  very  prompt  construc- 
tion of  the  canal  with  locks,  and  which  would  bear  heavily  upon  any 
company  disposed  to  undertake  the  continuation  of  the  work.  More- 
over, the  liquidator  was  not  able  to  repossess  the  workshops  and 
machinery,  etc.  (materiel),  which  had  been  turned  over  to  the  con- 
tractors by  the  company  except  after  having  arranged  the  respective 
claims  of  these  contractors. 

The  conditions  on  which  those  arrangements  were  made  varying 
according  to  the  original  arrangement  with  each  contractor  it  is  proper 
to  consider  them  separately. 

It  must  be  remembered  that  all  the  canceling  of  contracts  had  taken 
place  without  the  liquidators  according  to  the  contractors  any  indem- 
nity for  loss  of  profits  or  other  causes. 

COMPANY  OF  PUBLIC  WORKS  AND  CONSTRUCTIONS. 

The  compan}T  of  public  works  and  constructions  had  remained  adverse 
to  all  the  arrangements  made  between  the  provisional  administrators 


PANAMA  CANAL  TITLE. 


117 


and  the  other  large  contractors.  They  had  brought  several  suits  both 
before  and  after  the  suspension  of  payment. 

L.  On  the  6th  of  September,  1888,  they  summoned  M.  Ferdinand  de 
Lesseps  and  the  council  of  administration  of  the  Panama  ( 'oinpany  for 
damages  before  the  tribunal  civil  of  the  Seine  on  account  of  certain 
expressions  in  the  report  presented  on  the  1st  of  August  to  the  ordi- 
nary general  meeting  of  stockholders. 

2.  ( )n  the  7th  of  September,  1888,  they  summoned  the  Panama  Com- 
pany before  the  tribunal  of  commerce  of  the  Seine  to  be  condemned 
to  the  guarantee  of  the  sum  of  609, 139  francs  claimed  from  t  he  company 
of  public  works  and  constructions  by  MM.  E.  Jacqueminand  associates, 
subcontractors. 

3.  On  the  13th  of  October,  1889,  the  societ\T  of  public  works  and 
construction  raised  the  figure  of  the  preceding  demand  to  13,335,903.55 
francs.  They  also  demanded,  in  view  of  the  situation  of  the  company, 
to  be  guaranteed  by  it  against  the  claims  of  subcontractors,  and 
claimed  the  reimbursement  of  expenses  occasioned  by  the  stopping  of 
the  works. 

1.  The  canal  company,  acting  on  the  advice  of  its  provisional  admin- 
istrators and  administrative  council,  on  the  7th  of  January,  1889, 
summoned  the  society  of  public  works  and  construction  before  the 
tribunal  of  commerce  for  payment  of  8,702,756.30  francs. 

6.  However,  under  date  of  the  13th  of  December,  1888,  the  society 
of  public  works  and  construction  had  made  seizures  by  way  of  gar- 
nishment, limited  finally  to  2,000,000  francs  by  an  order  of  the  presi- 
dent of  the  civil  tribunal,  of  debts  owing  to  the  Panama  Company  by 
two  credit  companies.  Thus,  as  has  been  said  above,  this  opposition 
paralyzed  resources  of  which  the  liquidator  had  great  need. 

On  the  28th  of  February,  1889,  there  took  place  between  the  liqui- 
dator and  the  compan}T  of  public  works  and  constructions  a  transaction 
on  the  following  basis: 

1.  All  accounts  without  exception  between  the  parties  are  to  be 
settled  by  allowing  to  each  of  them  the  sums  held  by  them  at  the  date 
of  the  agreement. 

2.  The  parties  are  to  desist  from  all  suits  against  each  other. 

3.  All  previous  agreements  are  revoked. 

1.  The  plants  with  all  the  machinery,  etc.,  the  machinery  on  hand 
for  replacing  the  worn  or  broken  machinery,  the  fittings  and  supports 
of  the  machinery,  the  dwelling  houses,  the  other  buildings,  magazines, 
etc.,  existing  at  the  said  plants  are  to  be  turned  over  to  the  liquidation 
in  the  condition  in  which  they  may  be  and  such  as  they  shall  be  at  the 
time  of  the  turning  over. 

5.  The  final  deficiency  as  to  articles  to  be  furnished,  so  far  as  they 
have  been  furnished,  or  are  yet  to  be  furnished  byT  the  canal  company,  for 
the  establishments  of  the  company  of  public  works  and  constructions 
shall  be  settled  at  a  sum  arranged  in  view  of  the  present  condition  of 
the  canal  company,  the  articles  to  be  turned  over  to  the  canal  company 
in  full  ownership. 

6.  The  company  of  public  works  and  constructions  charges  itself 
with  the  settlement  of  the  accounts  of  Jacquemin,  and  desists  com- 
pletely from  the  demand  which  it  has  made  against  the  company  as 
guarantor. 

7.  The  company  of  public  works  and  constructions  likewise  renounces 
all  claim  against  the  company  on  account  of  the  ultimate  claims  of  its 
workmen. 


118 


PANAMA  CANAL  TITLE. 


8.  The  canal  company  will  reimburse  the  amount  deposited  as  secu- 
rity and  the  guaranty  retained,  which  belonged  to  the  company  of 
public  works  and  constructions. 

9.  The  company  of  public  works  and  constructions  withdraws  from 
all  the  opposition  it  has  instituted. 

10.  The  parties  reciprocally  abandon  all  rights  of  recovery and  claim-. 
This  agreement  has  been  approved  by  a  judgment  of  the  Tribunal  of 

the  Seine,  dated  5th  of  March,  1889;  registered  on  (he  19th  of  the  same 
month. 

CONCERN  OF  VIGNAUD,  BARBAUD,  BLANLEUTL  &  CO. 

At  the  time  of  the  suspension  of  payment  the  position  of  these  con- 
tractors was  such  that  it  was  necessary  for  the  canal  company  during 
several  months  to  provide  for  the  payment  of  their  workmen. 

On  account  of  the  condition  of  the  company,  the  provisional  admin- 
istrators were  compelled  to  limit,  and  finally  to  stop,  that  favor.  On 
the  23d  April,  1889,  Messrs.  Viepaud,  Barbaud,  Blanleuil  &  Co.  pro- 
ceeded against  the  liquidator  to  have  their  contracts  annulled,  for  the 
payment  of  16,000,902  francs  8  centimes,  and  for  the  reimbursement 
of  the  sum  of  2,265,000  francs,  representing  their  security  and  money 
retained  as  guaranty.  The  liquidation  has  made  a  cross  demand, 
amounting  to  8,658,705  francs  65  centimes. 

During  the  course  of  these  proceedings  the  company  of  Vignaud, 
Barbaud,  Blanleuil  &  Co.  has  been  thrown  into  judicial  liquidation  by 
a  judgment  of  the  tribunal  of  commerce,  dated  May  -t.  1889. 

The  tribunal  has  converted  the  judicial  liquidation  into  a  bankruptcy 
proceeding,  by  judgment  of  June  15,  1889. 

M.  Manger,  the  bankruptcy  syndic,  has  revived  the  suit  on  June  26, 
1881*.  and  submitted  propositions  of  settlement.  The  negotiations  had 
not  terminated  at  the  time  of  the  resignation  of  M.  Brunet. 

Accordingly,  tin4  suit  is  still  pending  before  the  civil  tribunal. 

The  liquidator  has  since  made  definitive  arrangements  with  the  five 
contracting  concerns  who.  on  the  request  of  the  provisional  adminis- 
trators and  afterwards  his  own  request,  consented  to  continue  the 
works  on  the  Isthmus.  These  five  concerns  are  MM.  Artigue,  Son- 
deregger c'v:  Co.;  Eiffel;  Baratoux,  Letellier  &  Co.,  Jacob/ and  The 
American  Contracting  and  Dredging  Company. 

CONCERN  OF  ARTIGUE,  SONDEREGGER  &  CO. 

On  the  25th  of  April,  1889,  the  liquidator  canceled  the  contract 
with  Messrs.  Artigue,  Sonderegger  &  Co.  on  the  following  conditions: 

1.  Messrs.  Artigue,  Sonderegger  &  Co.  abandon  all  their  rights  to 
damages  of  any  kind  that  ma}T  be  due  from  the  company. 

2.  The  canal  company  recovers  all  the  machinery,  etc..  and  acces- 
sories in  the  condition  in  which  they  may  be  found,  and  discharges 
the  concern  from  all  responsibility  for  them. 

3.  The  ultimate  arrangement  as  to  the  work  actually  performed  shall 
be  arranged  in  conformity  with  the  contracts.  And  to  determine  the 
quantity  exactly  of  cubic  meters  excavated,  there  shall  be  a  joint 
measurement  on  the  ground. 

According  as  the  results  of  that  verification  shall  give  a  cubic  meas- 
ure greater  or  less  than  that  actually  paid  for  by  the  company,  there 
is  to  result  a  debit  or  credit  for  Messrs.  Artigue,  Sonderegger  &  Co., 
whoare  to  pay  all  expenses. 


PANAMA  CANAL  TITLE. 


119 


The  settlement  shall  be  by  bills  (traites). 

4.  All  preceding  agreements,  with  the  exception  of  the  transac- 
tion constituting  the  pledge  of  Dth  of  February,  1889,  are  annulled 
and  canceled. 

This  agreement  has  been  executed;  the  measurement  on  the  ground 
has  taken  place  and  the  contracting  concern  has  been  found  to  be  a 
debtor  for  the  sum  of  31(J,201.tiO  frs.  which  it  has  paid  in  bills  on 
the  26th  August,  1889. 

CONCERN  OF  M.  EIFFEL. 

The  definitive  arrangement  with  M.  Eiffel  took  place  on  the  11th  of 
July,  1889.  After  an  examination  of  their  respective  claims,  the 
parties  agreed  upon  the  following  points: 

1.  The  two  parties  hold  themselves  free  of  all  engagements,  under 
reserve  of  the  regulation  provided  in  No.  tt  hereinafter  and  under 
the  benefit  of  the  restitution  which  is  hereinafter  explained. 

M.  Eiffel  has  received  from  the  company  allowances  on  account  and 
advances,  to  be  repaid  for  the  putting  in  place  and  furnishing  of  the 
things  necessary  for  the  construction  of  8  locks. 

These  allowances  and  advances  were  to  cover  not  only  the  value  of 
the  supporting  works  and  the  articles  but  also  the  expenses  attending 
their  preservation  and  alteration  up  to  the  completion  of  the  canal 
work  if  the  canal  work  had  been  carried  to  a  conclusion.  They  com- 
prise, besides,  a  part  of  the  remuneration  of  the  contractor  up  to  the 
finishing  of  the  locks. 

It  has  resulted  from  reports  made  from  the  Isthmus,  by  order  of  the 
liquidator,  that  M.  Eiffel  has  complied  with  his  engagements  so  far  as 
concerns  the  installations  and  the  articles  necessary  for  the  construc- 
tion of  the  8  locks,  but  the  interruption  of  the  work  put  a  stop  to  the 
expenses  hereinabove  mentioned  and  left  the  contractor  a  portion  of 
the  benefits  which  did  not  arise  from  a  finished  work. 

In  these  circumstances  it  appeared  just  to  the  liquidator  to  make 
M.  Eiffel  restore  a  part  of  the  allowances.  This  restitution  has  been 
fixed  by  agreement  at  the  sum  of  3,000,000  francs,  which  M.  Eiffel 
has  paid  to  the  liquidation;  that  is  to  say: 

Francs. 

In  money  „   2,280,082 

In  notes   300,  000 

By  abandoning  the  money  retained  as  guaranty  by  the  company   419, 918 

3, 000,  000 

2.  M.  Eiffel  turns  over  to  the  liquidator  all  the  large  and  small 
materiel,  the  machines,  constructions,  implements,  supplies  of  all 
sorts,  as  well  as  the  tracks,  dams,  supporting  works,  houses,  buildings, 
magazines,  sheds,  etc.,  all  of  these  in  the  condition  in  which  they  may 
be  on  the  Isthmus,  without  any  exception  or  reservation. 

M.  Eiffel  puts  at  the  disposition  of  the  liquidator  in  the  condition 
of  manufacture  in  which  they  may  be  the  materials  of  all  kinds 
destined  for  the  locks,  and  at  present  in  the  plants  on  the  Isthmus, 
or  in  the  shops  and  factories  of  M.  Eiffel  and  the  shops  of  those  fur- 
nishing them  to  him  in  France. 

The  inventory  of  the  materiel  shall  be  delivered  within  eight  days 
to  the  liquidator,  who  will  take  charge  of  said  things. 

M.  Eiffel  will  remain  chargeable  for  one  }rear  with  the  expense  for 
rent  of  the  ground  on  which  these  materials  are  or  m&y  be  placed. 


L20  PANAMA  CANAL  TITLE. 

M.  Eiffel  becomes  personally  responsible  for  all  claims  which  may 
be  made  by  those  furnishing  the  materials  to  him  on  his  order;  lie 
can  not,  on  this  ground,  have  any  recourse1  against  the  company. 

3.  The  company,  which  has  already  taken  charge  of  the  material 
and  installations  in  the  condition  in  which  they  were  found,  gives 
M.  Eiffel  a  release  of  responsibility  for  them;  there  shall  be  settled  a 
definitive  arrangement  as  to  the  work  which  has  been  done  by 
M.  Eiffel. 

4.  The  debit  or  credit  which  may  result  therefrom  for  M.  Eiffel  will 

represent  the  settlement  of  all  accounts.  The  settlement  shall  he  in 
bills  returned  by  M.  Eiffel,  or  in  acceptances  by  the  liquidator  if 
M.  Eiffel  is  found  to  be  a  creditor. 

5.  The  Liquidator  will  restore  within  three  days  after  the  judgment 
of  confirmation  the  hills  and  values  belonging  to  M.  Eiffel  either  as 
guaranty  retained  or  as  security. 

6.  The  pledging  of  February  !>.  1889,  is  continued  in  force. 

7.  The  present  agreements  will  be  definitive  after  they  have  been 
approved  by  the  tribunal  at  the  instance  of  the  Liquidator. 

8.  Each  party  shall  pay  half  of  the  expenses  of  registration  and 
approval  by  the  t  ribunal. 

This  agreement  was  approved  by  a  judgment  of  the  tribunal  of  the 
Seine  dated  July  31,  L889,  registered  the  Oth  of  August  following. 

In  execution  of  article  4  of  this  convention  the  status  of  the  work 
done  by  the  concern  has  been  established  by  the  parties  acting  in 
accord,  and  M.  Eiffel  has  been  recognized  as  a  creditor  to  the  amount 
of  853,896.75  francs,  which  has  been  paid  him  in  bills  accepted  by  the 
liquidator. 

CONCERN  OF  BARATOUX,  LETELLIER  &  CO. 

The  arrangement  with  Baratoux,  Letellier  &  Co.  has  been  concluded 
on  the  23d  October,  1889,  on  the  following  conditions: 

1.  The  parties  are  held  released  from  all  engagements  whatever  and 
renounce  on  both  sides  all  claims; 

2.  The  contractors  abandon  to  the  canal  company  a  part  of  the 
materiel  and  installations  belonging  to  them; 

3.  The  company  takes  charge  in  the  condition  in  which  they  are 
found  all  materiel  and  installations  which  belong  to  it  and  releases 
the  contractor  from  his  responsibility: 

1.  The  definitive  settlement  of  the  amount  of  work  performed  by 
the  contractors  has  resulted  in  a  credit  of  433,585.72  francs  in  favor  of 
the  contractors; 

The  liquidator  accepts,  up  to  that  amount,  bills  drawn  by  MM. 
Baratoux,  Letellier  &  Co. 

5.  The  pledge  of  February  9,  1889,  is  continued  in  force; 

6.  All  accounts  are  respectively  closed  and  ended; 

7.  The  agreement  will  be  definitive  after  approval  by  the  tribunal. 

This  convention  has  been  approved  by  a  judgment  of  the  civil  tri- 
bunal of  the  Seine,  dated  November  20,  1889,  registered  December  7 
of  the  same  year. 

CONCERN  OF  JACOB. 

The  dissolution  of  the  contract  with  the  Jacob  concern  could  not  be 
effected  try  M.  Brunet  on  account  of  the  number  and  large  amount  of 
the  claims  presented  by  the  contractor. 


PANAMA  CANAL  TITLE. 


121 


The  examination  of  these  claims  was  commenced  by  M.  Brunet 
before  he  ceased  to  act,  but  their  settlement  remained  in  suspense  aud 
Lb  being  arranged  at  present. 

AMERICAN  CONTRACTING  AND  DREDGING  COMPANY. 

The  settlement  of  the  affairs  of  this  concern  requires  waiting  for  an 
expert  examination  now  going  on  to  determine  the  cubic  excavation 
done  by  them  in  a  limited  section  of  the  canal. 

This  controversy  was  not  arranged  by  M.  Brunet  din  ing  his  incum- 
bency, and  is  still  under  discussion. 

Besides  these  five  great  concerns  there  existed  contracts  of  less 
importance,  the  definitive  settlement  of  which  had  not  been  accom- 
plished on  account  of  disagreements  between  the  company  and  the 
contractors.  These  are  the  contracts  with  Nercam  and  Piza,  Lindo, 
Baudouin  &  Co. 

NERCAM  CONCERN. 

M.  Nercam,  charged  in  the  month  of  January,  1886,  with  works 
of  derivations  to  the  canal,  demanded  the  dissolution  of  his  contract, 
the  payment  for  the  work  executed,  and  compensation  for  the  injury 
which  had  been  caused  him,  to  the  total  amount  of  1,200,000  francs. 

By  judgment  of  December  11,  1881),  the  civil  tribunal  of  the  Seine 
has  declared  the  contract  dissolved  and  has  condemned  the  liquidation 
to  pay  to  this  contractor,  for  the  two  chief  reclamations,  a  total  sum  of 
350,000  francs,  but  to  accord  to  the  liquidator  a  delay  of  a  year  to  free 
himself. 

PIZA,  LINDO  &  BAUDOUIN  CONCERN. 

An  identical  solution  has  intervened  for  these  contractors,  charged 
like  the  preceding  with  works  of  derivations  on  the  canal,  who  claim 
307,023  francs,  though  on  March  26,  1890,  the  civil  tribunal  of  the 
Seine  pronounced  the  dissolution  of  the  contract  and  condemned  the 
liquidation  to  pay  to  that  concern  a  sum  of  201,970.76  francs,  in  which 
total  were  107,023  francs,  the  amount  of  the  retained  guaranty,  and 
gave  the  liquidator  a  year  in  which'to  settle. 

The  retaking  of  materiel  by  the  agents  of  the  liquidation  on  the 
Isthmus  and  the  restoration  of  the  plants  have  given  rise  to  no 
complication. 


[Extract  from  second  report  of  the  liquidator.] 

On  the  2d  of  December,  1890,  a  seizure  was  made,  or  attachment  in 
the  hands  of  the  Lottery  Bond  Company,  of  prizes  due  and  to  become 
due  to  the  liquidation  upon  bonds  held  by  that  company.    *    *  * 

The  individual  proceedings  taken  by  several  shareholders  created 
many  difficulties,  which  would  only  increase  if  a  solution  was  not 
arrived  at  without  delay. 

On  the  other  hand  recent  publications  by  journals  in  America  and 
Colombia  revealed  the  fact  that  the  United  States,  knowing  how  much 
more  rapidly  and  inexpensively  the  Panama  Canal  can  be  built  than 
any  other,  was  awaiting  the  moment  when  it  could  get  the  benefit  of  the 
work  commenced  and  bring  it  to  a  conclusion  with  small  expense  with 
out  taking  any  account  of  the  efforts  and  the  sacrifices  previously  made. 


122 


PANAMA  CANAL  TITLE. 


The  Republic  of  Colombia  was  commencing  to  regard  with  a  Less 
hostile  eye  the  American  views. 

The  civil  tribunal  of  the  Seine,  doing  what  an  extraordinary  genera] 
meeting  of  the  stockholders  of  the  Panama  Company  had  not  been  able 
to  do.  since  such  a  meeting  hud  been  found  to  be  impossible,  gave  the 
liquidator  the  most  extensive  powers — "  notably  to  cede  or  contribute 
to  any  new  company  the  whole  or  part  of  the  company  assets." 

In  some  months,  perhaps  in  some  weeks,  the  difficulties  experienced 
by  the  liquidator  would  have  increased  to  such  a  point  as  to  render 
impossible  the  execution  of  this  mission  (mandat). 

It  was  necessary,  then,  quickly  to  arrive  at  one  of  two  solutions: 

The  constitution  of  a  new  company  for  the  construction  of  the  canal, 
or.  all  hope  of  recommencing  the  work  being  finally  abandoned,  tin? 
liquidation  to  be  finished  (la  liquidation  effective).  Assuredly,  not- 
withstanding the  expressed  wishes  of  a  great  many  bondholders,  it  was 
not  to  be  expected  that  Parliament  would  guarantee  or  patronize  an 
undertaking  which  is  of  a  private  character.  *  *  *  It  did  not -nit 
the  Government  or  Parliament  to  cause  hopes  to  arise  which  might 
once  again  transform  themselves  into  cruel  deceptions. 

But  it  was  not  to  be  overlooked  that  there  exists  an  amount  of 
material,  machines,  etc.  (un  materiel),  which  was  very  important,  and 
which  has  no  value  if  the  work  of  the  canal  is  not  resumed,  and  a  total 
of  works,  constructions,  materials,  workshops,  which  return  to  Colom- 
bia if  there  should  be  a  complete  abandonment  of  the  enterprise 
unhappily  interrupted. 

THE  JACOB  CONCERN. 

M.  Jacob  claimed  from  the  liquidation  for  damages  resulting  from 
the  breach  of  his  contract:  The  concession  to  other  concerns  or  execu- 
tion by  the  company  itself  of  works  which  should  have  been  given  to 
him;  failure  to  receive  in  due  time  or  condition  materiel  to  be  furnished; 
delay  in  the  execution  of  certain  dredgings;  payment  of  bills  for  articles 
intended  to  replace  others,  etc.;  the  stopping  of  the  work  by  the  fault 
of  the  company;  a  material  error  in  accounts;  loss  by  exchange  of 
money,  and  finally  for  expense  of  preservation  and  protection  of 
materiel,  a  sum  of  8,826,973.22  francs. 

The  liquidator  considered  that  all  these  demands  should  be  resisted. 
It  appeared  to  him  after  a  revision  of  the  invoices  that  there  was  due  to 
the  concern  only  the  sum  of  553,065.50  francs.  There  was  to  be  added 
to  that  sum  the  guaranty  in  the  safe  of  the  company  and  belonging  to 
M.  Jacob,  250,000  francs. 

As  a  result  a  transaction  took  place  between  the  liquidator  and  M. 
Jacob  on  July  25,  1890. 

The  definitive  statement  of  the  sum  remaining  due  to  the  latter  to 
settle  all  accounts  has  been  arranged  at  803,065.50  francs. 

The  liquidator  has  accepted,  to  that  amount,  bills  drawn  by  M. 
Jacob  and  bearing  3i  per  cent  interest,  the  said  notes  guaranteed  by 
special  pledge  (nantissement)  of  the  shares  of  the  Panama  Railroad 
Company  already  turned  over  to  the  contractor. 

M.  Jacob  has  abandoned  to  the  liquidation  all  the  materiel,  installa- 
tion and  construction  implements,  movable  property,  and  supplies  of 
whatever  kind  belonging  to  him  on  the  Isthmus. 


PANAMA   CANAL  TITLE. 


128 


The  parties  have  reciprocally  released  each  other  from  every  engage- 
ment and  renounced  all  ulterior  claims.  This  convention  has  been 
approved  by  a  judgment  of  the  civil  tribunal  of  the  Seine,  dated  July 
30,  1890. 

MJ&rrVIER-BOCHET  CONCERN. 

In  the  course  of  a  controversy  between  the  contractors  and  the  com- 
pany the  latter  has  placed  in  the  hands  of  MM.  Ehrmann  &  Co.. 
bankers  at  Panama,  a  guaranty  of  100,000  piasters. 

As  a  result  of  an  expert  examination  the  liquidation  was  condemned 
on  July  16,  1890,  by  the  tribunal  of  commerce  of  Panama  to  pay  the 
contractors  200,001  piasters  53  centimes. 

The  liquidator  having  appealed  from  that  decision,  MM.  Metivier 
and  Rochet  made  oilers  of  settlement.  It  has  been  agreed  that  the 
Liquidator  is  to  pay.  to  settle  all  accounts,  including  interests  and 
expenses,  98,000  piasters,  and  withdraw  from  the  hands  of  MM. 
Ehrmann  &  Co.  2,000  piasters.  This  agreement  was  approved  the  13th 
of  September,  1890,  by  the  superior  tribunal  of  the  district  of  Panama 
and  has  been  executed. 

AFFAIR  OF  THE  AMERICAN  CONTRACTING  AND  DREDGING  COMPANY. 

Mr.  H.  Slaven,  representing  this  concern,  claimed  for  work  per- 
formed since  the  dissolution  of  the  Panama  company  the  payment  for 
which  was  guaranteed  by  titles  subscribed  the  8th  of  January,  6th  of 
March,  11th  of  June,  1889,  and  by  a  pledge  of — 

Francs. 

3,000  shares  of  the  Panama  Railroad  stock   2,  579, 510.  56 

Interest   132,091.97 

1 1  is  guaranty  retained   300,  000.  00 

In  addition,  on  account  of  a  litigation  prior  to  the  dissolution  of  the 
Panama  company   600,  000.  00 

3,611,602.  53 

At  the  end  of  December,  1890,  the  obligations  subscribed  and  sev- 
eral times  renewed  not  having  been  paid  when  due.  Mr.  H.  Slaven 
manifested  his  intention  of  realizing  on  his  pledge. 

The  importance  was  realized  of  maintaining  in  the  hands  of  the 
bondholders  the  ownership  of  the  shares  in  the  American  Railway: 
inspired  with  this  thought,  the  liquidator  sought  means  to  set  free1  the 
3,000  shares  held  by  Mr.  H.  Slaven. 

By  the  terms  of  an  agreement  of  the  31st  of  December,  1890,  exe- 
cuted on  the  10th  of  January,  1891,  the  liquidator  turned  over  to  Mr. 
II.  Slaven: 

Francs. 

In  money  and  dividends  received  on  the  Panama  Railroad  shares   1,  717,  037.70 

7,500  lottery  bonds  at  their  value  on  January  10,  1891   562,  500.  00 

2,  279,  537.  70 

Mr.  H.  Slaven  has  surrendered  to  the  liquidation  the  obligations 
which  he  has  in  his  hands  and  the  3,000  shares  of  railroad  stock  and 
the  parties  have  renounced  all  claims. 

Admitting,  which  is  improbable,  that  the  7,500  lottery  bonds  would 
have  been  realized  at  75  francs,  this  agreement  resulted  in  the  aban- 
donment by  Mr.  H.  Slaven  of  a  sum  of  1,332,064.83  francs  of  his 
pretensions. 


124 


PANAMA  CANAL  TITLE. 


MAROLLK  AFFAIR. 

On  the  20th  of  March,  1889,  M.  Marolle,  civil  engineer,  to  whom 
had  been  confided  the  admission  of  proceeding  in  concurrence  with 
two  Colombian  engineers  to  the  work  of  measuring,  marking,  and 
platting  of  the  250,000  hectares  of  land  conceded  to  the  Panama  Com- 
pany in  execution  of  the  law  of  concession  of  18th  of  May,  1878,  sued 
the  liquidation  for  payment  of — 

Francs. 

1.  The  second  half  of  the  sum  he  claimed  to  be  due  t<>  him  for  his  services.  405,  7<>.">.  00 

2.  Payment  lor  a  supplementary  measurement  not  contemplated  by  the 

agreement  with  the  company    205,313.  75 

611,01s.  75 

By  judgment  of  the  21st  of  May,  1890,  the  tribunal  of  the  Seine  has 
disal  lowed  the  second  claim  of  M.  Marolle  and  has  suspended  his  claim 
for  payment,  giving  the  liquidator  four  months  in  which  to  examine 
and  have  the  Colombian  Government  examine  the  plats  made  by 
Marolle,  and  has  condemned  the  liquidation  to  pay  M.  Marolle  pro- 
visionally 250,000  francs,  giving  him  until  December  81,  1H90,  to  make 
payment.  At  the  expiration  of  that  suspension  M.  Murolle  demanded 
of  the  tribunal  the  execution  of  the  judgment  of  the  21st  of  May.  1890, 
and  the  payment  of  his  credit,  namely,  405,705  francs.  The  liquidator 
claimed  that  the  condemnation  of  the  21st  of  May,  L890,  was  only  con- 
ditional; that  the  condition,  that  is  to  say,  the  delivery  of  exact  plats 
prepared  in  conformity  to  the  requirements  of  the  Colombian  laws  and 
signed  by  the  two  Colombian  engineers,  had  not  been  complied  with. 

The  tribunal,  by  judgment  of  June  17,  1891,  held  that  the  matter 
was  res  judicata  and  condemned  the  liquidator  to  pay  M.  Marolle  the 
balance  of  his  credit,  "but  only  on  the  day  on  which  M.  Marolle  shall 
have  given  him  possession  of  plats  signed  by  the  two  official  colleagues 
and  complying  with  the  conditions  required  for  submission  to  the 
approval  of  the  Colombian  Government." 

This  putting  into  possession  has  not  taken  place. 

NERCAM  AFFAIR. 

The  civil  tribunal  of  the  Seine,  by  judgment  of  December  11,  1889, 
condemned  the  liquidation  to  pay  M.  Nercam,  former  contractor  of 
the  Panama  company,  the  sum  of  305,000  francs  for  work  and  damages, 
and  gave  the  liquidator  a  year  in  which  to  pay. 

At  the  expiration  of  that  time  the  heirs  and  representatives  of  M. 
Nercam,  who  had  inscribed  a  mortgage  under  the  judgment  upon  the 
immovable  property  in  the  Rue  Caumartin,  proceeded  to  the  seizure 
of  that  immovable,  which  was  already  effected  by  several  other  judi- 
cial mortgages. 

A  judgment  of  March  28,  1891,  having  converted  the  sale  upon 
seizure  into  a  sale  upon  judicial  publication,  the  immovable  property 
was  put  up  for  sale  the  13th  of  June,  1891,  at  the  fixed  minimum  of 
1,500,000  francs,  and  did  not  find  a  purchaser.  A  new  offer  was  made 
at  the  reduced  price  of  1,000,000  francs  without  resulting  in  bids  on 
the  12th  of  August,  1891,  and  the  affair  was  postponed.  The  mortgage 
creditors  showed  ^reat  impatience  and  a  new  offer  of  sale  is  to  be 
expected  soon. 


PANAMA   CANAL  TITLE. 


125 


AFFAIR  OF  LAURILLIARD,  FLEURY,  AND  OTHERS. 

Some  few  bondholders  of  the  Panama  Company  have  obtained  before 
the  justice  of  the  peaee  in  some  instances  and  before  the  civil  tribunal 
of  the  Seine  judgments  which  have  condemned  the  liquidator  to  pay 
them  the  amounts  of  their  coupons  overdue  and  the  amount  of  their 
bond. 

The  Liquidator  has  solicited  and  obtained  from  these  tribunals  sus- 
pensions, during  which  he  hoped  to  realize  combinations  w  hich  by 
improving  the  Fate  of  the  bondholders  might  perhaps  do  away  with 
the  personal  feeling  which  has  been  shown  in  the  prosecutions. 

Events  have  not  permitted  the  liquidator  to  attain  that  end  before 
the  expiration  of  the  suspensions  accorded  by  the  tribunals,  and  two 
bondholders  have  proceeded  successively  to  the  attachment  of  movables 
of  the  liquidation,  lottery  bonds  not  issued,  and  a  sum  of  15,081.50 
francs  in  money. 

The  liquidator  instituted  before  the  court  a  demand  to  have  declared 
void  these  different  seizures  of  movables  which  constitute  the  necessary 
implements  of  the  liquidation,  on  sums  declared  unsellable  by  a  stat- 
ute, on  property  which  the  liquidator  alone  has  the  power  to  negotiate. 

These  proceedings  are  pending. 

The  liquidator  has  considered  it  his  duty  to  defend  step  by  step  and 
to  the  last  extremity  the  assets  of  the  liquidation  against  proceedings 
by  individuals,  and  not  to  contribute  to  have  those  assets  become  the 
prize  of  the  race  course  and  be  absorbed  by  certain  creditors  whose 
situation  enables  them  to  make  advances,  to  the  detriment  of  all  the 
others. 

Further  reference  will  be  made  hereafter  to  the  situation  created  \yy 
these  isolated  proceedings  and  to  the  necessity  of  getting  them  disen- 
gaged. 

AFFAIR  VIGNAUD,  BARBAUD,  BLANLEUIL  &  CO. 

The  action  between  this  concern  and  the  liquidation  is  still  pending. 

VARIOUS  PROCEEDINGS  IN  COLOMBIA. 

Various  proceedings  are  still  pending  in  Colombia;  the  controversies 
in  court  permit  one  to  hope  they  can  be  regulated  in  France  by  means 
of  transactions  which  will  be  submitted  to  the  confirmation  of  the  civil 
tribunal  of  the  Seine;  as  the  others  before  the  judges  in  Colombia  con- 
form to  a  legislation  and  a  procedure  very  different  from  ours,  the 
liquidator  can  not  anticipate  what  will  be  the  issue  of  them. 


[Third  Report  of  the  liquidator.] 

The  third  report  of  the  liquidator  (made  after  the  Parliament  had 
been  induced  to  pass  the  act  of  July,  1893,  and  after  the  formation  of 
the  new  company  had  begun)  contains  the  following: 

The  litigation  has  had  extensive  progress  in  the  period  between 
November  12,  1891,  and  July  1,  1893,  the  date  of  the  promulgation  of 
the  lawT  concerning  the  liquidation.  I  consider  it  my  duty  to  give 
here,  as  in  my  preceding  reports,  an  exposition  of  these  matters. 


186 


PANAMA   CANAL  TITLE. 


NERCAM   AFFAIR.  ; 


At  the  auction  of  Angus!  12,  1891,  the  immovable  property  of  the 
Panama  company.  No.  4tf  Rue  Caumartin.  Pari-,  did  not  find*  a  pur- 
chaser at  the  minimum  price  of  1,000,000  francs.  It  was  again  offered 
for  sale  at  the  the  minimum  of  800,000  francs,  without  result,  on  the 
9th  of  December,  1891.  Finally  on  February  13,  1892,  M.  Jules 
Jaluzot  became  the  purchaser  for  600,060  fran<  >. 

A  settlement  was  made  among  the  mortgage  creditors  as  to  the  mid 
sum  of  600.050  francs,  and  resulted  in  a  friendly  arrangement,  as  the 
result  of  which  several  debts  of  the  company  have  been  entirely 
extinguished. 

These  are  those  of:  (lj  1£  Fleury:  (2)  M.  Nercam.  suitor:  (3)  If. 
Ehrmann,  transferee  of  a  part  of  the  Xercam  debt:  (4)  MM.  R.  T. 
Sonderegger  &  Co.  (contract  as  to  work  at  Bohio-Soldado). 

Finally.  Messrs.  Baudouin  and  Piza  Lindo.  admitted  for  a  credit  of 
20S.721.5'4  franc-,  received  only  a  sum  of  101.070  francs. 

AFFAIR  OF  VIGNAUD.  BARBAUD  BLAXLEUIL  s:  CO,* 

The  situation  has  not  changed. 


Thi>  matter  has  been  -ettled. 

Carrying  out  the  provisions  of  the  judgment  of  June  17.  1S91.  that 
is  to  ay,  the  turning  over  by  M.  Marolle  of  plans  signed  by  hi>  two 
official  colleagues,  and  conforming  to  the  conditions  necessary  for 
submission  to  the  approval  of  the  Colombian  Government.  M.  Marolle 
has  claimed  the  payment  of  his  credit,  that  it  is  to  my,  405,705  francs. 
On  July  5,  1898,  there  took  place  between  M.  Marolle  and  M.  Mon- 
chioouit  a  transaction  by  the  terms  of  which  the  liquidator  agreed  to 
pay  to  M.  Marolle.  after  approval  of  such  agreement  by  the  court,  a 
sum  of  300,000  francs  to  settle  all  accounts. 

This  transaction  was  approved  by  judgment  of  the  council  chamber 
of  the  court  dated  July  13.  1893,  and  has  been  executed  by  payment 
to  M.  Marolle  on  the  28th  of  the  same  month. 


Trvf  +y  transaction. — Among  other  proceedings  brought  before  the 
Colombian  tribunal  against  the  Panama  company,  or  the  liquidator, 
eight  have  been  terminated  by  a  transaction  concluded  at  Paris  with 
M.  Trufley.  representing  the  various  parties  interested. 
These  affairs  were  of  different  kinds:  they  con-isted: 
1.  In  demands  in  regulation  of  accounts  and  indemnities  of  canceled 
contracts  by  the  contractors  or  work  people  of  the  enterprise.  Brochet 


2.  In  a  demand  for  indemnity,  introduced  by  an  agricultural  and 
industrial  society  called  Playa  de  Flor.  on  account  of  the  loss  of  a  sloop 
belonging  to  it: 

3.  Finally,  in  a  demand  for  indemnity  on  account  of  dismissal  made 
by  an  agent  of  the  company  named  Pelli-sier.  and  by  the  widow  of 
another  agent.  Mme.  Girod. 


AFFAIR  >L\ROLLE.  J 


VARIOUS  PROCEEDINGS  IX  COLOMBL\. 


a  See  of  Second  Report. 


PANAMA  CANAL  TITLE. 


127 


The  demands  of  the  contractors  and  workmen  and  of  the  Plava  de 
Flor  Company  were  stated  in  piasters,  and  amounted  to  a  total  of 
910,601  piasters.  Those  of  M.  Pellissier  and  Mine.  Girod.  stated  in 
francs,  represented  the  sum  of  6.333  francs.  After  a  transaction,  dated 
March  11,  1892,  all  these  proceedings  have  been  terminated  by  a  pay- 
ment consented  to  by  the  liquidator  of  a  round  sum  of  12o,<  piasters, 

that  is  to  say,  444,000  francs,  at  3. To  francs  the  piaster,  which  the  agent 
of  the  parties  interested  charged  himself  with  dividing  among  them. 
The  payment  was  to  be  effected  after  approval  by  the  tribunal  by 
transmitting  to  M.  Truflev  of  5,208  lottery  bonds,  the  value  of  each 
bond  calculated  at  85.25  francs  (note  these  bonds  were  then  quoted  on 
the  bourse  at  72  francs). 

This  transaction  was  presented  to  the  tribunal  for  approval,  but  the 
chamber  of  the  council,  by  judgment  of  25th  of  August.  1892,  did  not 
consider  itself  required  to  approve  it  except  as  concerned  the  affair  of 
Gay.  in  which  a  minor  was  found  to  be  interested,  holding  as  to  the 
rest.  "  that  it  belonged  to  the  liquidator  according  to  the  terms  of  the 
powers  which  have  been  conferred  upon  him  to  enter  into  transactions 
(de  transiger).  if  he  rinds  it  useful  without  authorization  by  the  courts.'' 

Tanguy  affair, — According  to  a  contract  of  May  28.  1884,  the  com- 
pany had  conceded  to  M.  Amedee  Ligee  a  lot  of  lands  to  be  excavated, 
calculated  by  the  contract  at  200.0UO  cubic  meters,  at  a  place  called 
'•LesButtes  de  Pena  Blanca."  between  kilometers  21  k.  870  m.  and  23 
This  contract  was  transferred  after  the  death  of  M.  Ligee  to  M.  Tanguy 
by  a  substitution  dated  24th  October,  1884. 

According  to  an  agreement  of  the  3d  of  January,  1888,  this  contract 
was  dissolved,  but  the  parties  not  being  able  to  agree  as  to  their 
respective  accounts,  the  Canal  Company  obliged  itself  by  the  said  con- 
vention to  turn  over  provisionally  to  the  safe  of  M.  Henry  Ehrmann, 
banker  at  Panama,  the  sum  of  120,000  piasters  as  guaranty  for  the 
indemnities  which  might  be  allowed  to  M.  Tanguy  by  a  definitive  deci- 
sion of  the  courts  having  jurisdiction.  M.  Tanguy  carried  his  demand 
for  indemnity  before  the  Colombian  judges,  and  after  a  long  proceeding 
there  was.  on  May  19.  1892.  a  judgment  of  the  tribunal  of  commerce 
of  Panama  condemning  the  liquidator  to  pav  M.  Tanguv  the  sum  of 
124.268.33  (piasters). 

The  representative  of  the  liquidator  in  advising  him  of  that  decision 
informed  him,  after  having  taken  the  advice  of  the  counsel  of  the  liqui- 
dation at  Panama,  that  this  judgment  if  taken  before  the  appellate 
tribunals  could  only  be  confirmed,  and  that  the  amount  would  only  be 
augmented  by  a  condemnation  in  the  costs,  while  on  the  other  hand 
it  was  possible  to  settle  by  abandoning  to  M.  Tanguy  the  120,000 
piasters  on  deposit  with  M.  Ehrmann. 

But  the  liquidator  was  served  with  oppositions  at  Paris  of  the 
sums  due  to  M.  Tanguv.  oppositions  not  made  regular  by  proceedings 
at  Panama,  and  consequently  without  effect  according  to  the  juris- 
prudence of  the  Colombian  tribunals.  The  liquidator,  after  having 
brought  the  facts  to  the  knowledge  of  the  opposing  parties  and  having 
waited  the  time  necessary  to  permit  these  to  regularize  their  pro- 
ceedings, caused  to  be  submitted  to  the  Colombian  judges  the  question 
of  the  validity  of  these  oppositions. 

On  July  19,  1892.  the  superior  tribunal  of  Panama  judging  in  last 
resort  declared  void  and  of  no  effect  the  attachments  in  Pari-. 

In  consequence  a  transaction  was  concluded  on  July  3.  181*2.  by  the 
terms  of  which  this  affair  was  terminated  by  the  abandonment  to  M. 


128 


PANAMA  CANAL  TITLE. 


Tanguy  of  the  120,000  piasters  on  deposit  with  M.  Ehrmann.  This 
transaction  was  approved  by  judgment  of  the  superior  tribunal  of 
Panama  dated  July  25,  1892. 

Lux  affair. — By  the  terms  of  a  contract  dated  October  1,  1888, 
M.  A.  Lux  engaged  himself  to  furnish  to  the  company  40,000  tics  for 
ordinary  railroad  trucks.  The  delivery  of  these  40,000  ties  was  to  be 
effected  as  follows:  Twenty  thousand  ties  within  three  months  from 
the  signature  of  the  contract,  that  is,  as  extreme  limit  by  the  1st  of 
January,  1889,  the  20,000  others  in  the  following  two  months,  extreme 
limit  March  1.  If  at  that  date  the  delivery  was  not  completely  made, 
M.  Lux  was  to  incur  a  penalty  without  any  legal  proceedings  (de  plein 
droit)  of  500  piasters. 

The  delivery  not  having  been  accomplished  within  the  prescribed 
time,  M.  Lux  was  directed  by  order  from  the  company's  officials  dated 
March  8,  1889,  to  suspend  the  furnishing  of  ties  until  further  orders. 
M.  Lux,  claiming  that  the  delay  in  the  delivery  was  caused  by  the 
company,  and  moreover,  that  he  had  a  right  to  continue  the  delivery 
upon  paying  the  penalty  of  500  piasters,  sued  the  company  before  the 
Colombian  tribunal  for  the  payment  of  44,711.80  francs,  value  of  the 
31,937  francs  remaining  to  be  delivered,  and  15,000  piasters  by  reason 
of  the  damages  for  aonreception  of  the  ties,  to  wit:  a  total  of  59,711.80 
francs. 

The  tribunal  of  commerce  of  Panama  sustained  in  part  the  claims  of 
M.  Lux  and  condemned  the  liquidation  to  pay  to  M.  Lux  the  sum  of 
44,711.80  francs,  representing  the  value  of  the  31,937  tics  to  be  deliv- 
ered, rejecting  the  demand  for  damages.  This  decision  carried  on 
appeal  before  the  superior  tribunal  was  set  aside  and  the  company  was 
discharged  from  the  condemnation  pronounced  against  it.  Finally, 
the  court  of  cassation  at  Bogota  getting  jurisdiction  confirmed  the 
sentence  of  the  superior  tribunal. 

PROCEEDINGS  INSTITUTED  BY  VARIOUS  BONDHOLDERS. 

1.  Joreau  affair. — Mile  Joreau,  bondholder,  obtained  on  January 
26,  1893,  from  the  civil  tribunal  of  the  Seine  a  judgment  condemning 
the  liquidator  to  pay  her — 

(1)  The  amount  paid  by  her  for  her  subscription  to  divers  bonds  of 
the  company; 

(2)  Damages  representing  the  amount  of  the  sum  promised  as  antic- 
ipated reimbursement  (prime  d'amortissement)  due  on  those  bonds; 

(3)  The  unpaid  coupons  up  to  December  14,  1888; 

(4)  The  legal  expenses. 

This  judgment  gave  to  the  liquidator  live  weeks  in  which  to  pay,  a 
time  during  which  all  proceedings  were  to  be  suspended. 

This  time  having  expired,  the  liquidator,  in  view  of  the  vote  of  the 
Chamber  of  Deputies  on  the  bill  presented  by  the  Government  on 
March  6,  took  an  appeal  from  that  judgment. 

In  contempt  of  that  appeal  Mile  Joreau  caused  the  seizure,  on  March 
8,  at  the  headquarters  of  the  liquidation,  of  unissued  lottery  bonds. 

The  liquidator  immediately  introduced  a  proceeding  to  nullify  that 
seizure,  which  is  now  pending  before  the  tribunal.  The  court  of 
appeal  by  decree  of  June  29,  1893,  simply  and  without  change  con- 
firmed the  judgment  of  January  26, 


PANAMA  CANAL  TITLE.  129 

Mile  Jorcau  has  caused  the  service,  in  virtue  of  her  judgment,  of 
attachment  orders  upon  divers  persons. 

2.  Roger  affai/r. — This  affair  is  identical  with  the  Jorcau  affair. 
Francois  affair. — The  same  as  the  Jorcau  affair. 

Donn adieu  and  Bougala  affairs. — The  same. 

Debrys  affair. — The  same. 

Affair  of  the  heirs  of  VaiUant.  -  The  same. 

Denovarre  affair. — The  same.  The  same  proceedings,  the  same 
appeal,  the  same  measures  to  secure  execution  (mesure  conservatoire), 
only  M.  Denovarre  has  proceeded  by  opposition. 

3.  Salleix-Laboige  affuir. — An  affair  analogous  to  the  Joreau  affair. 
Judgment  of  the  same  day,  January  26,  1893,  not  yet  notified  (signifie*). 

No  measure  to  secure  means  of  execution. 

1.  Doumic  affair. — An  affair  analogous  to  those  of  Joreau  and 
others. 

5.  Dirt  rs  bondholders. — MM.  Pichot,  Noyelle,  Delaplace,  Laporte, 
Gesnys,  Pilon;  We.  Lepecheux,  Dubar,  Ratfard,  Bonhourc;  Mile. 
Tanies,  Chappellier,  Estagerie;  Vve.  Sarrazin,  Sassier,  Brion,  Petit; 
M.  Jamain. 

Proceedings  introduced  by  the  above  mentioned  with  the  same  object 
as  the  Joreau  suit.    The  affairs  are  pending. 

N.  B. — M.  Estagerie  has  considered  himself  authorized  by  his  bonds 
themselves  and  without  judicial  permission  to  enter  an  opposition  in 
the  hands  of  M.  Silvestre,  notary  at  Tulle,  as  to  the  sums  which  may 
be  due  to  the  liquidation. 

Same  situation  as  to  M.  Sassier,  Mme.  Vve  Brion,  M.  Jamain,  and 
Mme.  Petit.  In  these  cases  the  oppositions  have  been  served  upon 
Messrs.  Hugo  Oberndoerffer,  Eiffel,  Baihaut,  and  others.  All  these 
individual  suits  and  the  measures  taken  in  pursuance  of  them  are  to-day 
suspended  in  consequence  of  the  promulgation  of  the  law  of  July  1, 
1893,  which  will  be  discussed  hereinafter. 

Muraccioli  affair. — M.  Muraccioli,  contractor,  sued  the  liquidator 
on  the  21st  of  October,  1892,  for  payment  of  an  account  of  815  piasters 
1  centavos,  representing  3,380.15  francs,  at  tt  francs  the  piaster,  fixed 
by  the  plaintiff. 

The  liquidator,  while  recognizing  the  principle  of  the  demand,  claimed 
to  owe  only  3,274.53  francs,  the  piaster  being  worth,  according  to  him, 
3.875  francs. 

The  tribunal,  try  judgment  of  April  11, 1893,  condemned  the  liquida- 
tor to  pa}T  M.  Muraccioli  the  sum  of  3,380.15  francs. 

The  judgment  was  notified  to  the  liquidator  the  23d  of  May,  1893. 
It  has  not  been  executed. 

This  action  is  also  suspended  as  a  result  of  the  promulgation  of  the 
law  of  July  1,  1893. 

Beinach  affair. — Oh  December  3,  1892,  the  liquidator,  in  view  of 
the  actions  and  rights  which  he  might  have  to  make  use  of  against  the 
succession  of  Baron  de  Reinach,  served  notice  upon  his  heirs  and  M. 
Imbert,  provisional  administrator  of  his  succession,  prohibiting  them 
to  proceed  without  his  presence  with  the  operations  of  accounting 
liquidation  and  division  of  the  succession. 

Moreover,  on  August  27, 1893,  the  liquidator  sued  M.  Imbert.  admin- 
istrator of  the  succession  of  Reinach,  for  restitution  of  the  sum  of 
9,253,792. 59  francs,  received  hj  M.  Reinach  on  account  of  (1)  participa- 

8751—02  9 


130 


PANAMA  CANAL  TITLE. 


tion  in  the  syndicates  of  the  different  issues  of  bonds  of  the  Panama 
company;  (2)  payment  of  expenses  of  publication  for  the  said  issues; 
(3)  payment  of  commission  by  the  concerns  Cubtill,  De  Lungo,  Wat- 
son &  Van  Hattum,  Artigue,  Sonderegger  &  Co.,  and  Eiffel. 

Cornelius  Herz  affair. — M.  [mbert,  provisional  administrator  of  the 
succession  of  Baron  de  Reinach,  instituted  before  (he  civil  tribunal  of 
the  Seine  a  suit  against  M.  Cornelius  Herz,  to  have  it  declared  that 
seven  pieces  of  real  property  situated  at  Paris,  and  appearing  to  belong 
to  Mmc.  Cornelius  Her/,  were  in  reality  the  property  of  M.  Cornelius 
Herz  and  should  be  replaced  among  his  assets. 

By  means  of  conclusions  notified  the  L9th  of  June,  L893,  the  Liquida- 
tor intervened  in  tin1  proceedings  to  join  in  the  demands  of  M.  Imbert. 

Subsequently  to  this  date  M.  ( rautron,  appointed  coliquidator,  intro- 
duced conclusions  to  revive  the  action. 

M.  Lemarquis,  mandataire  of  the  bondholders,  also  Intervened  in 
the  proceeding. 

On  February  15, 1894,  the  civil  tribunal  of  first  instance  of  the  Seine 
rendered  a  judgment  (judgment  sustaining  the  demands  quoted). 

The  tribunal  also  found  itself  possessed,  by  the  action  of  M.  Lemar- 
quis, mandataire  of  the  bondholders,  of  a  demand  for  restitution  of 
the  sum  of  600,000  francs  received  by  Cornelius  Herz  from  the  Panama 
company. 

MM.  Monchicourt  and  Gautron  intervened  in  that  proceeding.  By 
a  judgment,  also  rendered  February  1."),  the  tribunal  admitted  the  inter- 
ventions of  MM.  Monchicourt  and  Gautron  in  their  official  characters 
and  suspended  judgment  to  await  the  definitive  result  of  criminal  pro- 
ceedings against  Cornelius  Herz,  reserving  a  decision  as  to  costs. 

On  the  10th  of  March,  1894,  a  transaction  took  place  between  M. 
Imbert,  judicial  administrator,  and  the  succession  of  M.  de  Reinach, 
M.  Lucien  de  Reinach,  Mile  Juliette  de  Reinach,  M.  Gautron,  coliqui- 
dator of  the  Universal  Company  of  the  Interoceanic  Canal  of  Panama; 
M.  Lemarquis,  mandataire  of  the  bondholders  of  Panama,  and  Mme. 
Bianca  Saroni,  wife  of  Cornelius  Herz,  acting  as  well  in  her  own  name 
as  the  authorized  agent  of  her  husband. 

This  transaction  will  be  submitted  for  approval  to  the  tribunal  con- 
formably to  the  requirements  of  the  law  of  July  1,  1893. 

Baihaut  affair. — Madame  Baihaut,  following  up  a  proceeding  insti- 
tuted by  her  husband,  introduced  before  the  civil  tribunal  of  the  Seine 
an  action  for  separation  of  property.  The  liquidator  intervened  in  that 
action  in  the  character  of  eventual  creditor  of  M.  Baihaut.  The  action 
was  pending  when,  on  March  31,  1893,  there  was  rendered  a  decree  of 
the  assize  court  [the  court  ordered  him  and  others  to  reimburse  to  the 
liquidation  the  sum  of  375,000  francs  received  by  M.  Baihaut].  Upon 
considering  these  intervening  matters,  the  civil  tribunal  passed  upon 
the  demands  of  Mme.  Baihaut.  By  judgment  of  March  28,  1893,  the 
tribunal  pronounced  the  separation  of  properties,  admitted  the  inter- 
vention of  M.  Monchicourt,  declaring  as  to  the  rest  that  the  operations 
of  the  liquidation  could  not  take  place  except  in  his  presence  or  after 
due  notice  to  him. 

The  beginning  of  the  operations  of  the  liquidation,  at  the  instance 
of  Mme.  Baihaut,  took  place  on  April  10,  1893,  with  the  aid  of  M. 
Bertrand,  notary.  The  liquidator  caused  himself  to  be  represented 
there.  It  is  not  known  at  present  what  sum  the  liquidator  will  be  able 
to  recover  from  the  personal  property  of  M.  Baihaut. 


PANAMA  CANAL  TITLE. 


131 


Cottu  affair. — On  March  27,  1S93,  Mine.  Cottu  introduced  an  action 
for  separation  of  goods  against  hor  husband,  Henri  Cottu.  By  conclu- 
sions notified  the  16th  of  April.  L893,  the  liquidator  intervened  in  that 
action.     By  judgment  of  May  If),  the  tribunal  pronounced  the 

separation  of  goods  between  husband  and  wife,  admitted  the  interven- 
tion of  the  liquidator,  and  ordered  that  the  operations  of  liquidation 
were  to  take  place  only  in  the  presence  of  M.  Monchicourt.  The 
liquidation  is  proceeding. 

Hugo  (>lh  nahnrffrr  affair. — On  May  9,  1893,  the  liquidator  sued  M. 
Oberndoerffer  for  restitution  of  the  sum  of  3Ji:-U,3f>4.4.'")  francs  received 
by  him  by  reason  of:  (1)  Participation  in  the  syndicates  for  the  issue 
of  the  bonds  of  March  14  and  June  26,  1888;  (2)  commissions  for  plac- 
ing bonds  and  aid  in  the  issue  of  June  26, 1888:  (3)  payment  of  expenses 
of  publication.    The  affair  is  pending. 

Wyse  affair. — In  May,  1s:m>,  the  liquidator  confided  to  M.  Lucien- 
Napoleon  Bonaparte  Wyse  the  mission  of  going  to  Bogota  to  negotiate 
with  the  Colombian  Government  for  a  prorogation  of  the  concession 
accorded  on  the  18th  of  May,  1878,  for  the  construction  of  the  canal 
of  Panama. 

On  his  return  to  France,  after  having  obtained  the  prorogation  on 
the  conditions  which  the  liquidator  has  explained  in  his  second  report 
M.  Wyse  claimed  from  the  liquidator  the  payment  of  his  fees.  On 
account  of  this  payment  a  disagreement  arose  between  M.  Bonaparte- 
Wyse  and  the  liquidator,  M.  Bonaparte- Wyse  placing  his  case  before 
the  first  chamber  of  the  civil  tribunal  of  the  Seine. 

Finally,  M.  Bonaparte- Wyse  claimed  a  million,  of  which  the  liquida- 
tor refused  to  pay  the  whole  amount,  alleging  that  M.  Bonaparte- Wyse 
had  not  fulfilled  his  orders  in  the  conditions  provided,  and  that  a  por- 
tion of  the  amount  could  not  be  exacted.  The  liquidator  offered 
400,000  francs. 

By  a  judgment  of  the  11th  of  January,  1894,  the  tribunal  condemned 
the  liquidation  to  pay  M.  Bonaparte- Wyse  the  sum  of  400,000  francs 
in  full  settlement  of  all  claims. 

ACTION    OF   THE    LIQUIDATORS  AGAINST   THE  ADMINISTRATORS  OF  THE 
OLD  UNIVERSAL  COMPANY  OF  THE  INTEROCEANIC  CANAL. 

During  the  month  of  August,  1893,  MM.  Monchicourt  and  Gautron, 
both  acting  in  the  name  of  and  as  liquidators  of  the  Universal  Company 
of  the  Interoceanic  Canal  of  Panama,  summoned  the  former  administra- 
tors of  the  said  company  before  the  civil  tribunal  of  first  instance  of  the 
Seine  for  the  payment  of  damages  to  be  fixed  by  accounting  for  mis- 
management, and  demanded  a  provisional  condemnation  of  50,000,000 
franc-. 

TRANSACTION  WITH  M.  EIFFEL. 

On  the  11th  of  August,  1893,  M.  Lemarquis,  mandataire  of  bond- 
holders entered  an  action  against  M.  Eiffel  for  18,000,000  francs,  and 
asked  that  the  judgment  might  be  also  in  favor  of  the  liquidators  of 
the  Panama  Company. 

On  the  20th  of  January,  1891:,  a  transaction  took  place  between 
MM.  Monchicourt  and  Gautron,  liquidators  of  the  Panama  Company, 
M.  Lemarquis,  mandataire  of  the  bondholders,  and  M.  Eiffel. 

This  transaction  will  be  submitted  to  the  approval  of  the  tribunal  in 
conformity  with  the  law  of  July  1,  1893. 


132 


PANAMA  CANAL  TITLE. 


[Fourth  report  of  the  liquidator.] 

In  this  connection  I  have  the  honor  to  remind  the  tribunal  that, 
since  the  month  of  August,  1894, 1  have  made  a  scries  of  arrangement  - 
with  the  different  contractors  the  terms  of  which,  after  having  exam- 
ined the  accounts  of  each  one,  J  have  undertaken  to  pay  in  lottery 
bonds,  warning  each  of  them  that  the  remittance  of  these  bonds  could 
not  take  place  until  after  I  had  obtained,  either  by  judicial  authority 
or  friendly  arrangement  the  release  of  the  attachments  upon  these 
lottery  bonds. 

BARATOUX,  LETELLIER  &  CO. 

Agreement  of  the  8th  of  August,  judgment  of  10th  of  August,  pay- 
ment in  lottery  bonds  at  their  market  value  within  fifteen  days  preced- 


ing the  agreement,  increased  by  3  francs. 

Francs. 

Debt  settled  at   2,  269,  009.  33 

Lottery  bonds  to  be  delivered,  18,270,  at  124  francs  18.75  centimes  2,  2G8, 905.  63 

Cash  balance   103.  70 

Total   2,209,009.33 

JACOB  SUCCESSION. 

Agreement  of  the  Sth  of  August,  1894,  approved  on  the  9th  of 


August,  payment  in  lottery  bonds  at  their  market  value  within  fifteen 
(lavs  preceding  the  agreement,  increased  by  3  francs,  the  value  not 


being  less  than  120  francs. 

Francs. 

Debt  settled  at   2, 126,  366.  01 

Lottery  bonds  to  be  delivered,  17,122,  at  124  francs  18.75  centimes   2, 126,  338.  37 

Cash  balance   27.64 

Total   2,126,366.01 

ARTIGUE  SONDEREGGER  &  CO. 


Agreement  of  August  14,  1894,  confirmed  August  17,  payment  in 
lottery  bonds  at  their  market  value  within  fifteen  days  preceding  the 


agreement,  increased  by  3  francs. 

Francs. 

Debt  settled  at   1,  921,  004.  88 


Lottery  bonds  to  be  delivered,  15,657,  at  122  francs  68.75  centimes         1,  920,  918. 18 

Cash  balance   86.  70 


Total   1,921,004.88 


I  also  settled  the  debt  due  M.  Eiffel  in  execution  of  the  transaction 
of  the  26th  of  January,  1894,  approved  b}^  the  tribunal,  the  bonds  to 
be  accepted  by  M.  Eiffel  at  the  price  of  125  francs. 


Francs. 

Amount  due  to  him   7, 147,  264.  33 

Lottery  bonds,  57,178,  at  125  francs   7, 147,  250.  00 

Cash  balance   14.  33 

Total   7,147,264.33 


PANAMA  CANAL  TITLE. 


133 


The  contractors  gave  me  the  bills  which  they  held,  and  by  an  act 
received  the  same  day  by  Me.  M^gret,  notary,  they  gave  their  dis- 
charge from  the  sequestration  constituted  on  the  9th  of  February, 
L889,  and  released  the  pledge  (nantissement)  w  hich  was  conceded  to 
them  on  the  30,500  shares  of  the  Panama  Railroad  Company,  and  Me. 
Cheramv,  the  pledge-holder,  handed  me  the  titles  to  these  shares. 

In  execution  of  the  engagements  which  I  made  in  the  by-laws,  1  have 
transferred  to  the  new  company  of  the  canal  of  Panama  the  rights  of 
the  liquidation  in  the  railroad  from  Panama  to  Colon;  I  took  the  neces- 
sary steps  to  assure  myself  of  the  inalienability  of  these  rights  and  of 
their  eventual  return  to  the  liquidation  in  the  circumstances  provided 
for  by  article  5,  paragraph  3,  of  the  by-laws,  etc.;  in  accord  with  the 
council  of  administration  of  the  New  Panama  Company,  the  Comptoir 
National  d'Escompte  has  been  named  as  trustee  to  hold  said  rights. 

It  then  remained  for  me  to  pa}7  the  second  quarter  of  the  158,950 
shares  of  the  new  company  subscribed  by  the  liquidation. 

I  was  obliged,  in  this  case,  to  pay  an  interest  of  6  per  cent  on  account 
of  delay  (article  12  of  the  by-laws)  from  the  31st  of  October,  1894,  on 
a  sum  of  3,973,750  francs. 

I  emplo}Ted  for  the  payment  of  these  shares  all  the  available  resources 
of  the  liquidation  and  the  sums  resulting  from  various  payments  and 
transactions. 

M.  Imbert,  liquidator  of  the  De  Reinach  succession,  paid,  in  May, 
1891:,  to  M.  Lemarquis,  mandataire  of  the  bondholders,  the  sum  of 
1,000,000  francs  in  virtue  of  the  transaction  with  M.  Cornelius  Herz 
and  the  De  Reinach  succession. 

The  heirs  of  Barbe  paid  to  M.  Lemarquis,  in  December,  1894,  the 
sum  of  500,000  francs  in  execution  of  a  transaction  of  August,  1894. 

On  the  7th  May  and  4th  December,  1894,  conformably  with  article 
5,  paragraph  2,  of  the  law  of  July  1,  1893,  M.  Lemarquis  paid  these 
two  sums,  forming  a  total  of  1,500,000  francs  to  the  credit  of  the  liqui- 
dation, into  the  "Caisse  des  depots  et  consignations." 

I  received,  on  the  31st  of  December,  1894,  the  amount  of  the  judg- 
ment pronounced  against  M.  Baihaut,  namel}T,  534,791.60  francs. 

Finally,  after  the  30th  of  June,  1895,  M.  Lemarquis  paid  to  the  credit 
of  the  liquidation,  as  realized  from  the  transaction  with  M.  Cornelius 
Herz,  various  sums  amounting  together  to  1,335,868.33  francs. 

Under  these  conditions  1  was  enabled  to  pay  to  the  new  compan}T, 
in  settlement  of  the  second  quarter,  on  the  158,950  shares  which  have 
been  ascribed  to  the  liquidation,  3,973,750  francs. 

I  have  thus  been  able  to  pay  the  first  two  quarters  of  all  the  shares 
of  the  new  company  subscribed  by  the  liquidation,  and  have  paid  the 
interest  for  delay,  without  having  recourse  to  the  alienation  of  any 
lottery  bonds. 

[Fourth  part.] 
VARIOUS  MATTERS. 

To  complete  the  recital  of  the  litigation  (situation  contentieuse)  of 
the  liquidation  I  must  mention  the  following  facts: 

1.  From  the  time  of  the  constitution  of  the  civil  company  for  the 
amortization  of  the  lottery  bonds  the  headquarters  of  that  company 
were  established  at  the  property  possessed  by  the  Panama  Company, 
at  Rue  Caumartin,  Paris,  and  the  latter  company  was  charged  with 


184 


PANAMA  CANAL  TITLE. 


effecting,  free  of  charge,  the  payment  of  the  sums  due  to  the  civil 
company  on  the  lottery  bonds,  and  to  assure,  five  of  charge,  the  Issuing 
of  the  bonds  and  the  drawings. 

A.fter  the  liquidation  of  the  Panama  Company,  and  the  sale  of  the 
property  in  the  Rue Caumartin,  the  eivil  company  was  obliged  to  t  rans- 
fer  its  head  offices  to  the  branch  of  the  Comptoir  National  d'Escompte 
of  Paris.  2  Place  de  L'(  )pera.  and  to  charge  that  establishment  to  assure 
the  issuing  of  bonds  and  drawings. 

The  council  of  mandataires  of  the  civil  company  demanded  of  the 
liquidation  the  sum  of  L50,000  francs  as  guaranty  of  the  expenses  of 
the  administration,  as  well  for  the  past  as  for  the  future. 

The  judgmentof  the  3d  August,  L894,  which  sanctioned  the  agree- 
ment made  in  regard  to  the  settlement  of  the  balance  of  the  lottery 
bonds,  fixed  the  sum  to  be  paid  by  the  liquidation  at  130,000  francs. 

This  judgment  has  been  executed. 

The  civil  society  for  the  amortization  of  the  new  bonds,  third  series, 
of  the  Old  Panama  Company  (issue  of  March,  L888)  was  in  the  same 
situation  as  the  eivil  society  for  the  amortization  of  the  lottery  bonds. 
It  was  obliged  to  assure  the  issuing  of  bonds  and  the  drawings,  which 
could  no  longer  be  done  free  of  charge  by  the  liquidation. 

It  claimed  from  the  liquidation: 

Francs. 

Advance  for  acquiring  a  wheel,  expenses  of  putting  numbers  on  the  wheel,  etc. .    5,  280 


Expenses  of  administration  up  to  1894    1,  000 

To  assure,  in  the  future,  the  expenses  of  administration  and  of  drawings          50,  000 

Total   56,280 

The  Tribunal  by  judgment  of  August  3,  1894,  condemned  the  liqui- 
dation to  pay: 

Francs. 

For  acquiring  a  wheel,  etc   5,  280 

Expenses  of  administration  and  drawings,  as  well  in  the  past  as  in  the  future.  20,000 

Total   25,  280 


This  judgment  has  been  executed. 


[Fifth  report  of  the  liquidator.] 
LITIGATION  IN  FRANCE. 

Affair  Vignaud,  Barbaud,  Blanleuil  &  Co. — This  affair  received  a 
definitive  solution  by  means  of  a  transaction  under  date  the  7th  of 
March,  1896,  entered  into  between  the  liquidator  of  the  Panama  Com- 
pany, the  judicial  mandataire  of  the  bondholders,  M.  Bonneau,  in  the 
capacity  of  liquidator  of  the  company  of  current  accounts  and  deposits, 
and  MM.  Vignaud,  Barbaud,  Blanleuil  &  Co. 

MM.Vignaud,  Barbaud,  Blanleuil  &  Co.  demanded  of  the  liquida- 
tion the  payment  of  a  total  sum  of  16,402,154  francs,  made  up  as 
follows: 

Francs. 

1.  Balance  of  the  price  of  their  work   1,  336, 154 

2.  Damages   15,066,000 


Total 


16,  402, 154 


PANAMA  CANAL  TITLE. 


135 


They  demanded  besides,  the  restitution  of  their  security  in  govern- 
ment annuities  (that  is  37,748  francs  of  o  per  cent  rente  of  the  French 
Government)  with  the  back  receipts  or  interest  on  them  and  the  reim- 
bursement of  the  sum  of  1,283,547. 20 francs  arising  from  the  guaranty 
held  by  the  Old  Panama  Company. 

The  liquidation,  on  its  side,  claimed  to  be  a  creditor  of  MM.  Vignaud 
Barbaud,  Blanleuil  &  Co.,  by  reason  of  the  inexecution  of  their  con- 
tracts, and  claimed  from  them  the  sum  of  8,658,703.65  francs.  Finally. 
M.  Bonneau,  judicial  Liquidator  of  the  company  of  current  accounts  and 
deposits,  intervened  in  the  name  of  that  company  as  the  creditor  of 
.AIM.  Vignaud,  Barbaud,  Blanleuil  &  Co. 

In  this  situation,  the  parties  being  desirous  of  putting  an  end  to  the 
suit  in  which  they  were  engaged,  concluded  a  transaction  on  the  fol- 
lowing basis: 

M.  Bonneau  was  authorized  to  withdraw  from  the  Caisse  depots  et 
consignations  the  sums  and  values  which  had  been  deposited  there  and 
which  represented  the  securities  of  MM.  Vignaud,  Barbaud,  Blanleuil 
&  Co.,  and  the  back  interest  arising  on  them. 

M.  Bonneau  was  authorized  to  realize  on  the  37,748  francs  of  3  per 
cent  annuity  wmich  constituted  the  bond  given  by  MM.  Vignaud, 
Barbaud,  Blanleuil  &  Co.  From  this  realization,  increased  by  the 
amounts  withdrawn  in  money.  M.  Bonneau  takes  a  sum  of  9(jo,000 
francs  which  was  acquired  to  the  company  of  current  accounts  and 
deposits. 

This  sum  has  been  applied: 

1.  To  reimburse  to  the  company  of  deposits  and  current  accounts 
the  amount  in  principal  of  a  credit  given  to  MM.  Vignaud,  Barbaud, 
Blanleuil  &  Co.  of  250,000  francs. 

2.  To  give  back  to  the  same  company  the  sum  of  650,000  francs  put 
up  as  security  for  Vignaud,  Barbaud,  Blanleuil  &  Co. 

The  liquidation  of  the  Panama  Company  has  kept  the  back  interest 
received  by  them  on  the  3  per  cent  annuity  (French  Government  rentes) 
of  37,748  francs,  namely,  84,933  francs,  and  has  received  besides  from 
M.  Bonneau  the  sum  of  188,740  francs  for  the  back  interest  of  the 
said  annuity  paid  in  by  the  Bank  of  France  and  the  Caisse  of  consign- 
ations, successively  depositaries  of  the  values. 

This  transaction  was  approved  by  the  judge  commissaire  of  the  judi- 
cial liquidation  of  the  company  of  current  accounts  and  deposits  and 
approved  Ifv  the  tribunal  of  commerce  (judgment  of  23d  of  March. 
1896)  and  by  the  tribunal  of  the  Seine  (judgment  of  2*M  of  May,  1896). 

L>  marquis  affair,  m,andatairt  qfbondholdi  rs^againsttheliquidalion. — 
In  the  month  of  August,  1893,  M.  Lemarquis,  judicial  mandataire  of 
bondholders,  summoned  the  liquidation  for  payment  of  the  sum  of 
1.777.111,600  francs,  with  interest,  this  sum  representing  the  amount 
of  all  the  bonds  issued  by  the  Universal  Company  of  the  interoceanic 
canal,  even  in  the  form  of  lottery  bonds.  This  proceeding  had  for  its 
object  the  determination  by  the  tribunal  of  the  basis  of  the  distribu- 
tion to  be  made  by  the  liquidator.  It  raised,  as  well  from  the  point  of 
view  the  calculation  of  the  debt  of  coupons  and  that  of  the  sinking 
pa}mients  as  from  the  point  of  view  of  the  admissibility,  as  a  debt  of 
the  liquidation,  of  the  lottery  bonds  and  others  of  which  the  amorti- 
zation is  guaranteed  by  civil  companies,  very  delicate  questions  and  a 
complicated  accounting.  M.  Lemarquis  and  myself  have  united  our 
efforts  in  order  that  the  decision  of  the  tribunal  should  not  be  delayed. 


136 


PANAMA  CANAL  TITLE. 


Affair  Derenne  and  associates  against  the  liquidation, — On  tin4,  26th 
December,  L896,  MM.  Derenne,  Le  Voyer,  and  others,  holder-  of 
bonds  in  the  Old  Panama  ( Jompany,  summoned  me  before  the  tribunal 
of*the  Seine,  asking  that  it  might  be  ordained  that  in  the  space  of 
time  thai  it  might  please  the  tribunal  to  fix — 

M.  Gautron  should  proceed  to  the  distribution  among  the  creditors  and  bond- 
holders of  the  assets  such  as  they  exist  in  the  hands  of  the  liquidator,  reserving  the 
amount  necessary  to  make  the  final  payment  for  the  stock  of  the  New  Panama 
Company. 

To  have  determined  by  the  tribunal,  the  conditions  of  the  speediest  possible  real- 
ization of  the  assets,  in  view  of  the  longtime  since  the  placing  into  liquidation  of  the 
company,  and  the  necessity  for  finishing  it  before  the  original  subscribers  disappear. 

To  have  it  decreed  that  the  lottery  bonds  be  distributed  prorata  among  the  bond- 
holders according  to  their  ascertained  rights,  and  if  this  could  not  be  done  by  the 
distribution  in  kind  that  they  should  be  sold,  reserving  to  the  bondholders  of  the 
company  the  right  of  preemption  according  to  the  precedents  already  established  by 
the  tribunal. 

To  have  M.  Lemarquis  bound  with  the  liquidator  by  a  common  judgment. 

MM.  Derenne  and  associates  summoned  the  mandataire  of  tin;  bond- 
holders to  have  the  judgment  made  a  common  one. 

Various  bondholders  have  intervened  in  this  suit  to  oppose  the 
claims  of  MM.  Derenne  and  Le  Voyer  and  others.  It  is  not  proper 
to  discuss  here  a  claim  that  has  been  submitted  to  the  decision  of 
the  tribunal. 

*****  *  * 

(The  sixth  report  of  the  Liquidator  quotes  at  length  the  decision  of 
the  tribunal  denying  all  of  the  demands  of  MM.  Derenne,  Le  Voyer, 
and  others.) 

Tburralle  affair. — On  the  22d  of  November,  1895,  Mme.  Maria 
Iturralbe  wrote  from  Panama  to  the  liquidator  to  inform  him  that  her 
father,  Dr.  Mateo  Iturralbe,  deceased,  was  the  owner,  under  the 
terms  of  a  notarial  act  registered  at  Panama,  of  an  island  at  Maria-Sala; 
that  at  the  commencement  of  the  canal  works  the  agents  of  the  old  com- 
pany occupied  the  ground  and  destroyed  tin1  plantations  which  were 
there;  that  her  father  had  claimed  the  value  of  the  ground  and  also 
an  indemnity  for  the  plantations  destroyed;  that  the  company  had 
admitted  the  claim  but  objected  that  it  would  be  necessaiw  as  a  pre- 
liminary to  proceed  to  measure  the  property  in  order  to  fix  the  value 
of  the  ground  on  the  basis  of  a  price  paid  in  a  similar  affair  of  a 
M.  Buitniyo;  that  she  accepted  these  conditions. 

The  claim  of  Mme.  Iturralbe  was  terminated  by  a  transaction  under 
date  the  27th  of  March,  1896,  by  the  terms  of  which  the  liquidation  paid 
to  Mme.  Iturralbe  a  sum  of  300  piasters  in  settlement  of  all  claims. 

Affair  of  Messrs.  Schuber  Bros. — MM.  Schuber  Bros.,  citizens  of 
the  United  States  of  America,  are  proprietors  of  an  estate  called 
"Juan  Diaz  Caballero,"  situated  at  Panama. 

On  the  9th  of  December,  1891,  they  sued  the  liquidation  before  the 
Colombian  tribunal  for  pa}Tment  of  a  sum  of  150,000  piasters,  reduced 
in  June,  1896,  to  134,868  piasters,  the  old  Panama  Company  having 
made  use  of  a  portion  of  their  estate  for  the  construction  of  a  road 
from  Panama  to  Corozal.  There  Avas  included  in  the  sum  claimed, 
the  value  of  the  materials  taken  by  the  company  from  their  estate,  and 
damages  for  the  injury  caused  to  them  by  the  destruction  of  the  fences, 
the  clearing  away  of  the  woods,  the  excavations,  soundings,  etc. 

This  affair  gave  rise  to  a  complicated  proceeding,  and  entailed  numer- 


PANAMA   CANAL  TITLE. 


137 


on*  judicial  decisions  rendered  by  the  civil  tribunal  of  Panama,  the 
superior  tribunal  of  the  same  town,  and  t  in4  supreme  court  of  Bogota. 

All  attempts  at  an  amicable  arrangement  up  to  the  present  nave 
failed.    The  suit  is  continuing. 

Affair  of  Domingo  Diaz. — In  18S5,  at  the  time  of  the  construction  of 
(lie  ('-(Mitral  hospital  of  Panama,  the  Universal  Company  of  the  Inter- 
oceanic  Canal  having  acknowledged  that  a  part  of  the  property  called 
"Huerta  del  Gallo,"  was  necessary  to  them  for  the  installation  of 
dwellings  for  the  doctors,  chemists,  and  others,  asked  the  proprietor, 
M.  Ehrmann,  to  authorize  their  occupation  of  the  said  property. 

M.  Ehrmann  accorded  this  authority  gratuitously. 

In  1888  M.  Ehrmann  sold  the  property  "Huerta  del  Gallo"  to  M. 
Domingo  Diaz,  who  claimed  as  belonging  to  him,  the  portion  of  the 
ground  taken  by  the  old  company. 

The  action  between  M.  Domingo  Diaz  and  the  liquidation  is  pending 
at  Panama. 


[Sixth  report  of  the  liquidator.] 
LITIGATION  IN  FRANCE. 

Affairs  of  Derenne,  Le  Voyer,  and  associates  against  the  liquidation. — 
On  the  26th  of  December,  1896,  MM.  Derenne,  Le  Voyer,  and  others 
summoned  the  liquidator  before  the  civil  tribunal  of  the  Seine  to  have 
him  ordered  to  immediately  make  among  the  creditors  and  bond- 
holders the  distribution  of  the  assets  remaining  in  his  hands,  and  notably 
the  lottery  bonds,  and  to  have  determined  the  conditions  of  the  realiza- 
tion of  the  assets. 

By  judgment  of  the  30th  of  December,  1897,  the  tribunal  declared 
Derenne,  Le  Voyer,  and  their  consorts  inadmissible  and  unfounded  in 
their  demands  and  conclusions,  dismissed  them,  and  condemned  them 
to  pay  all  costs. 

MM.  Derenne  and  consorts  took  an  appeal  from  this  judgment  by 
notification  of  Le  Breton,  bailiff,  dated  the  25th  of  March,  1898. 

But  they  did  not  follow  up  this  appeal,  but  withdrew  from  it  by  doc- 
ument of  Le  Breton,  bailiff,  dated  March  30,  1898,  upon  payment  of 
their  costs  by  the  liquidator. 

Affair  of  Lemarquis,  mandataire  of  the  bondholders,  against  the  liqui- 
dator.— The  suit  begun  by  M.  Lemarquis,  August  3,  1893,  against 
MM.  Monchicourt  and  Gautron  had  for  its  object  to  have  determined 
by  the  civil  tribunal  of  the  Seine  the  basis  of  the  distribution  which 
the  liquidator  would  have  to  make  among  the  different  bondholders  of 
the  old  Panama  Company. 

*  *  *  *  *  *  #• 

M.  Lemarquis  took  an  appeal.  The  court  of  appeal  passed  upon  the 
respective  appeals  of  the  liquidator  and  mandataire.    *    *  * 

In  conformity  with  this  decree  of  the  court  of  appeal  and  after  the 
depositing  by  the  expert  of  a  modified  report,  the  tribunal  of  the  Seine, 
by  a  judgment  dated  August  1,  1900,  has  definitively  fixed  the  basis 
of  the  distribution  for  the  different  kinds  of  bonds  issued  by  the  Uni- 
versal Company  of  the  Interoceanic  Canal,  the  tribunal  ratifying  in  all 
respects  the  report  of  Cagnat,  expert,  deposited  in  the  clerk's  office  the 


138 


PANAMA  CANAL  TITLE. 


7th  of  Juljr,  1900,  and  concerning  the  bonds  of  1882,  5  per  cent,  and 
the  bonds  of  1884,  4  per  cent. 

Ratifying  in  all  respects  the  report  of  Cagnat,  expert,  deposited  in 
the  clerk's  office  L9th  of  January,  1900,  and  concerning  the  new  bond, 
third  series,  and  the  lottery  bonds,  but  only  as  to  the  part  of  his  report 
prepared  on  the  basis  established  by  the  definitive  judgment  of  March 
2,  L899: 

Declares  that  it  is  not  necessary  to  consider  or  pass  upon  the  remain- 
der of  the  said  report  made  contrary  to  the  basis  fixed  by  the  said 
gentlemen: 

Declares  that  at  the  time  of  the  distribution  of  the  assets  in  the  man- 
ner prescribed  by  article  6  and  following  of  the  law  of  July  1,  1893,  the 
holders  of  paid-up  bonds  of  the  hereinafter-mentioned  issues  who  shall 
produce  them  at  the  place  of  liquidation  within  the  time  allowed  by 
the  law  shall  be  admitted  upon  the  following  basis:  Issue  of  1882,  5 
per  cent,  150.62  francs  per  bond;  issue  of  1883,  3  per  cent,  302.11 
francs  per  bond;  issue  of  1881,  1  per  cent,  313.51  francs  per  bond; 
issue  of  1886,  6  per  cent  new  bonds,  first  series,  557.10  francs  per 
bond;  issue  of  1887,  6  per  cent,  new  second  series,  508.28  francs  per 
bond;  issue  of  March  14,  1888,  new  bonds,  third  series,  390.35  francs 
per  bond:  issue  of  June  26,  1888,  lottery  bonds,  295.65  francs  per 
bond;  and  this  with  the  interest  on  the  said  sums  calculated  from 
December  11,  1888; 

The  sums,  principal  and  accessory,  remaining  due  to  pay  completely 
what  they  are  entitled  to. 

Affair  of  La  pi  ante  against  the  liquidation — Tierce  opposition  to  the 
judgment  in.  the  1>>  /  <  nm  affair. — By  document  dated  June  27,  1898, 
M.  Laplante  acting  in  his  capacity  as  heir  of  Mile.  Joreau,  in  her 
lifetime  owner  of  a  number  of  bonds  of  the  Uniyersal  Company  of 
the  Interoceanic  Canal,  has  introduced  tierce  opposition  to  the  judg- 
ment rendered  the  30th  of  December,  1897,  in  the  suit  by  Messrs.  De- 
renne  and  consorts,  and  has  taken  up,  appropriating  them  to  himself, 
the  conclusions  submitted  by  these  latter. 

By  the  same  document  he  summoned  before  the  civil  tribunal  of 
the  Seine  MM.  Gautron,  liquidator  of  the  Uniyersal  Compam^  of  the 
Interoceanic  Canal,  and  Lemarquis,  mandataire  by  law  of  the  bond- 
holders. 

By  judgment  of  May  1<».  1899,  the  civil  tribunal  of  the  Seine  declared 
the  tierce  opposition  of  M.  Laplante  inadmissible  on  this  ground, 
principally,  that  he  was  a  party  to  the  judgment  of  December  31. 1897, 
since  he  was  represented  therein  by  Lemarquis,  who  acted  in  that  suit 
only  in  the  character  of  mandataire  of  the  holders  of  the  bonds,  and 
who,  as  such,  united  in  his  hands  all  the  rights  of  individual  action  of 
these  latter. 

On  June  30.  1899.  M.  Laplante  appealed  from  that  judgment.  The 
court  of  appeals,  by  decree  of  April  25,  1900,  confirmed  in  all  respects 
the  judgment  of  May  10,  1899. 

Affair  <>f  Donnad'n  u  against  JUL  Gautron  and  Lemarquis. — M. 
Donnadieu,  the  owner  of  a  certain  number  of  bonds  of  the  old  Pan- 
ama Company,  by  document  of  the  5th  of  March,  1897.  summoned 
M.  Lemarquis,  legal  mandataire  of  the  bondholders  of  the  Panama 
Company,  to  institute  suit  against  the  stockholders  of  the  Civil  Panama 
Company  for  payment  of  the  company's  debts.  M.  Lemarquis  not 
having  begun  any  action  of  that  kind,  M.  Donnadieu  had  the  right, 


3'ANAMA  CANAL  TITLE. 


139 


according  to  the  terms  of  article  2,  section  \.  of  the  law  of  July  I, 
L892,  (o  exercise  himself  that  righl  of  net  ion  at  his  own  risk  and  peril; 
hut  in  order  to  do  so,  and  to  know  who  were  the  stockholders  of  the 
company,  it  was  indispensable  to  him  to  have  knowledge  of  certain 
documents,  and  especially  of  the  list  of  transfers  of  the  shares  of  the 
Panama  Company.  M.  Lemarquis,  if  lie  had  instituted  such  an  action, 
would  have  had  the  right  to  require  from  the  liquidator  the  communi- 
cation of  those  documents. 

M.  Donnadieu,  pretending  to  be  subrogated  to  the  legal  mandataire, 
claimed  to  have  the  same  right  to  that  communication. 

*  *  *  *  *  *  * 

By  judgment  of  the  first  chamber  of  the  civil  tribunal  of  the  Seine, 
Donnadieu  was  declared  inadmissible  and  unfounded  in  his  demands, 
dismissed,  and  condemned  to  pay  the  costs. 

M.  Donnadieu  took  an  appeal  from  this  judgment  by  document  of 
April  1,  1898. 

By  decree  of  the  first  chamber,  dated  August  4,  1898,  the  court  of 
appeals  of  Paris,  adopting  the  reasons  of  the  law  court,  decided  against 
the  appellant. 

.[fair  of  Gautron  against  the  council  of  mandataire  of  the  civil 
company  of  redemption  of  the  new  bonds,  third  series  (issue  of  March 
lit,  1888). — (This  was  an  attempt  of  this  redemption  company  to  dis- 
solve, the  liquidator  interposing  a  protest.  The  compan}'  abandoning 
that  plan  then  attempted  to  reduce  its  capital  stock,  which  was  also 
protested  against,  but  the  general  meeting  of  the  company  undertook 
to  carry  out  their  plan.  The  civil  tribunal  of  the  Seine  decided  that 
the  resolution  of  the  general  meeting  was  illegal,  and  forbade  44  the 
defendants  to  put  into  execution  the  said  resolution,  and  especially  to 
withdraw  from  the  Bank  of  France  all  government  bonds  (rentes),  in 
order  to  divide  them  among  the  bondholders  of  the  company."  The 
council  of  mandataires  appealed,  and  the  affair  was  pending  in  the 
court  of  appeals  when  this  sixth  report  of  the  liquidator  was  written. 
See  Exhibit  9  for  further  proceedings.) 

Affair  <>f  V<>n  Berg  <&  Co.  against  the  liquidator. — By  a  notification 
of  March  6,  1899,  MM.  Von  Berg  &  Co.  instituted  before  the  civil 
tribunal  of  the  Seine  against  the  liquidation  a  demand  of  payment  of 
190,577. 20  francs,  representing — 

1.  The  price  of  a  steam  excavator,  a  transporter,  and  the  accessory 
implements; 

2.  The  expenses  of  the  voyage  and  stay  in  the  Isthmus  of  MM.  Von 
Berg  &  Co.,  or  their  representative,  for  the  putting  in  place  of  this 
apparatus. 

They  demanded,  besides,  interest  on  the  said  sum  to  date  from  the 
summons  made  b}Tthem  on  the  Universal  Company  of  the  Interoceanic 
Canal  on  May  5,  1888. 

The  liquidator  opposed  the  demand,  and  maintained  that  according 
to  the  contract  between  MM.  Von  Berg  &  Co.  and  the  Universal 
Company  of  the  Interoceanic  Canal  the  price  of  the  apparatus  was  to 
be  paid  only  after  its  delivery  "in  a  good  state  of  working  and  after 
receipt  in  the  conditions  determined." 

These  conditions  had  never  been  complied  with.  The  affair  is  pend- 
ing before  the  tribunal. 

Affair  of  Four  mont  against  the  liquidator. — M.  Fourmont  proceeded 
against  the  liquidator  on  the  15th  of  June,  1895,  and  against  M.  Eiffel 


140 


P  A  NANA   CANAL  TITLE. 


in  conjunction  with  him,  for  payment  of  a  sum  of  9,000,000  francs, 

which  he  claimed  to  be  due  him  as  damages  on  account  of  the  copying 

of  his  patent,  No.  162947,  to  his  prejudice. 
This  summons  remained  without  being  followed  up  during  fouryears. 
On  the  7th  of  July,  1899,  M.  Fourmonl  served  M.  Gautron  with  his 

corrected  conclusions,  asking  the  tribunal  that — 

Whereas  by  his  initial  proceeding  M.  Fourmont  claimed  from  M. 

Gautron  as  Liquidator  and  M,  Eiffel  a  sum  of  9,000,000  francs  by  wny 

of  damages; 

And  whereas  it  was  by  error  that  this  condemnation  was  demanded 
against  M.  Eiffel,  who  was  not  a  party  in  the  matter; 

And  whereas,  on  the  other  hand,  in  order  to  ascertain  the  merits 
and  the  amount  which  M.  Fourmont  has  a  right  to  demand,  it  is 
proper  to  send  the  matter  before  a  judge  of  the  tribunal  for  him  to 
fix  the  sum  of  the  damages  to  which  he  is  entitled; 

For  these  reasons  to  declare  M.  Fourmont's  demand  to  apply  to  M. 
Gautron  as  Liquidator,  and  not  to  M.  Eiffel,  and,  before  deciding  the 
matter,  to  send  it  before  such  one  of  the  judges  as  the  tribunal  may 
see  fit,  to  fix  the  amount  of  the  damages. 

The  liquidator  considers  that  the  contention  of  M.  Fourmont  already 
made  several  times  does  not  rest  upon  any  serious  foundation.  The 
affair  is  pending  before  the  civil  tribunal  of  the  Seine. 

LITIGATION  EN  COLOMBIA. 

Tlie  affair  q f  Sc /tuber  Bros,  against  the  liquidation. — On  December  9, 
1891,  the  Schuber  Brothers  sued  the  liquidator  before  the  Colombian 
tribunals  for  150,000  piasters,  which  sum  was  reduced  by  them  in 
June,  1896,  to  131,808  piasters,  in  reparation  of  a  damage  which  the 
Universal  Company  of  the  Interoceanic  Canal  had  caused  them  by 
opening  on  their  land  the  road  of  Qorozal.    (Fifth  Report.) 

By  a  decision  of  July  26,  1898,  the  judge  of  first  instance  condemned 
the  liquidator  to  pay  MM.  Schuber  Brothers  45,935  piasters  95 
centavos.  The  liquidator  appealed  from  this  decision,  and  the  superior 
tribunal  of  Panama,  judging  in  last  resort,  reduced  to  28,389  piasters 
67  centavos,  the  amount  of  the  condemnation  pronounced  against  the 
liquidator. 

MM.  Schuber  Brothers  and  the  liquidator  not  having  proceeded  to 
the  court  of  cassation,  the  superior  tribunal,  by  a  judgment  of  July 
13,  1899,  ordered  the  Panama  Company  in  liquidation  to  pay  to  M. 
Henry  Schuber,  as  representative  of  the  company  of  Schuber  Broth- 
ers, the  sum  of  28,339  piasters  67  centavos  and  the  legal  interest  on 
that  sum  from  June  30,  1899,  to  the  day  of  payment,  with  the  costs 
of  the  present  proceedings. 

On  the  request  of  M.  Henry  Schuber,  dated  September  25,  1899,  and 
by  judgment  of  September  27,  1899,  the  superior  tribunal  of  Panama, 
in  conformity  with  the  said  request,  to  the  effect  that  there  should  be 
delivered  to  M.  Schuber  a  letter  rogatory  to  avoid  the  injury  to  him 
which  would  result  from  the  dela}\s  incident  to  sending  the  matter 
through  the  diplomatic  channel,  decided  in  favor  of  this  request,  and 
that  there  should  be  an  order  delivered  to  the  interested  party.  The 
notification  of  it  was  ordered. 

In  execution  of  this  decision,  on  the  9th  of  October,  1899,  the  judge 
of  the  court  delivered  a  letter  rogatory  addressed  to  the  competent 


PANAMA  CANAL  TITLE. 


141 


authority  in  civil  matters  of  the  city  of  Paris,  which  was  requested  to 
notify  the  judgment  of  July  13,  1899,  to  the  representative  of  the 
Universal  Company  of  the  Interoceanic  Canal,  to  require  of  him  the 
payment  of  the  sum  required  to  execute  the  judgment,  and  in  default 
of  payment  to  require  of  him  to  furnish,  under  oath,  property  which 
could  respond  to  the  demand. 

The  juagment  of  July  17,  1889  (sic;  should  be  1899),  that  of  Sep- 
tember 27,  1899,  and  the  letter  rogatory  of  October  9,  1899,  were 
served  upon  the  liquidator  bv  a  document  of  Marecat,  bailiff  at  Paris, 
on  the  14th  of  March,  1900,  at  the  request  of  M.  Schuber. 

The  judgment  of  condemnation  not  having  been  notified  through 
the  diplomatic  channel,  and  this  procedure  not  being  in  conformity 
with  French  law,  according  to  which  judgments  rendered  in  foreign 
tribunals  can  not  receive  execution  in  France,  except  after  they  have 
been  declared  executory  by  French  tribunals,  the  liquidator  reserves 
to  himself,  should  M.  Schuber  carry  out  the  formalities  prescribed  by 
French  law  and  ask  the  exequatur  of  the  judgment  which  he  has 
obtained  in  Colombia,  to  take  the  advice  of  counsel,  as  to  the  attitude 
which  the  exceptional  position  in  which  the  law  places  him  requires 
him  to  take. 

Affair  of  Domingo  Diaz  against  the  liquidator. — At  the  time  of  the 
construction  of  a  hospital  at  Panama  in  1885,  the  Universal  Company 
of  the  Interoceanic  Canal  obtained  from  M.  Ehrmann  the  gratuitous 
permission  to  occupy  a  part  of  his  property  called  "  Huerta  del  Gallo," 
in  order  to  place  there  a  certain  part  of  the  hospital  administration. 

M.  Domingo  Diaz,  to  whom  M.  Ehrmann  sold  his  property,  claimed 
as  belonging  to  him  the  land  occupied  b}T  the  company.  (See  Fifth 
Report.) 

The  claim  of  M.  Domingo  Diaz  was  rejected  by  a  judgment  of  the 
tribunal  of  first  instance  of  Panama,  dated  April  22,  1818  (sic). 

M.  Domingo  Diaz  took  an  appeal  from  that  decision. 

Contrary  to  all  expectation,  the  superior  tribunal  of  Panama,  by  a 
decision  of  June,  1899,  condemned  the  liquidator  to  pay  to  M.  Diaz 
the  sum  of  2  piasters  per  square  meter  of  the  land  claimed  by  him 
according  to  a  calculation  by  experts,  with  the  legal  interest  since  the 
day  on  which  the  plaintiff  entered  into  possession  of  the  land  up  to 
the  day  when  he  shall  be  paid  its  value. 

The  liquidator  proceeded  to  the  court  of  cassation.  The  affair  is 
pending  before  the  supreme  court  at  Bogota. 

Affair  of  Carpeno  <t<j<iinst  the  liquidator. — Some  years  ago  the  Uni- 
versal Company  of  the  Interoceanic  Canal  was  condemned  to  indemnify 
Mme.  Carreno  for  the  damages  caused  to  her  by  the  company  upon 
her  property  called  '"Honduras,"  requiring  her  to  make  proof  of  the 
damages  in  a  new  proceeding. 

Dr.  Jesurum,  calling  himself  a  transferee  of  the  right  of  action  of 
Mme.  Carreno,  started  a  new  proceeding 

*  *-  *  ■»     .        *  *  * 

As  a  result,  the  liquidator  paid  on  July  30,  1900.  to  the  agent  of  Dr. 
Jesurum  the  amount  of  1,008.96  francs.    The  affair  is  terminated. 

Affair  of  Icaza  against  the  liquidator. — The  heirs  of  M.  Pablo  Elias 
de  Icaza  claim  that  by  virtue  of  a  judgment  dated  December  16,  1886, 
their  father  had  taken  from  him.  for  the  benefit  of  the  Universal  Com- 
pany of  the  Interoceanic  Canal  of  Panama,  2  hectares,  12^  ares,  being 
part  of  the  property  called  "Carro  de  San  Juan.,?    They  add  that  this 


142 


PANAMA   CANAL  TITLE. 


taking  of  property  was  done  with  the  fixing  by  judgment  of  an  indem- 
nity of  1  piaster  7  centavos  per  square  meter  of  land;  that  is,  41,225 
piasters  for  the  24,250  meters  condemned. 

They  claim  also  that  the  judgment  of  December  16,  1886,  was  noti- 
fied to  the  company  on  January  16,  L887,  that  it  did  not  take  an  appeal 
from  that  decision  and  has  not  paid  the  amount  within  the  time  hxed 
by  the  judgment. 

As  a  result,  they  have  obtained  from  the  civil  tribunal  of  the  first 
district  of  Panama,  dated  September  6,  1897,  a  judgment  ordering 
a  seizure  against  the  Panama  Canal  Company  in  favor  of  the  heirs  of 
Icaza  to  the  amount  of  41,225  piasters,  and  that  on  default  of  payment 
the  company  against  whom  the  order  for  seizure  is  made  shall  name  a 
depositary  and  an  expert  valuer  of  the  property  to  be  seized,  and  in 
default  of  its  making  that  nomination  this  shall  be  done  hy  the  trib- 
unal or  by  some  one  designated  by  it  for  that  purpose. 

The  tribunal  at  the  same  time  ordered  the  notification  in  due  form 
of  its  judgment. 

The  judgment  was  notified  to  the  Liquidator  through  the  diplomatic 
channel  on  the  18th  of  June,  1898. 

Since  that  time  the  parties  have  not  taken  any  steps. 


EXHIBIT  11. 

JUDGMENT  OF  JULY  26,  1894  (CIVIL  TRIBUNAL  OF  THE  SEINE),  DECID- 
ING AGAINST  MLLE.  JOREAl  . 

FRENCH  REPUBLIC,  IN  THE  NAME  OF  THE  FRENCH  PEOPLE. 

The  civil  tribunal  of  first  instance  of  the  department  of  the  Seine, 
sitting  in  the  palace  of  justice  at  Paris,  has  rendered  in  public  session 
of  the  first  chamber  the  following  judgment: 

Session  of  July  26,  1894. 

Between  M.  Jean  Poire  Gautron  *  *  *  and  Mile.  Joreau, 
etc.    *    *  * 

Considering  that  by  virtue  of  a  judgment  rendered  by  this  chamber 
January  26, 1893,  condemning  Monchicourt,  in  his  character  of  liquidator 
of  the  Universal  Company  of  the  Interoceanic  Canal  of  Panama  to  pay 
to  Mile.  Joreau  the  principal  sum  of  153,169  francs  40  centimes,  and, 
according  to  documents  of  Thiellement,  bailiff  at  Paris,  dated  February 
24  and  25,  1893,  Mile.  Joreau  has  served  injunction  or  garnishment 
papers  upon  the  civil  association  for  sinking  Panama  Canal  lottery 
bonds  and  upon  the  director  of  the  bureau  of  deposits  and  consign- 
ments, as  to  all  the  sums  they  have  received  or  may  receive,  due  to 
Monchicourt  as  liquidator  by  whatever  right;  that  these  papers  have 
been  served,  but  Mile.  Joreau  has  not  proceeded  in  her  suit  to  have 
them  declared  valid; 

That  Gautron,  become  liquidator  of  said  company,  demands  that 
the  opposition  proceedings  referred  to  may  be  declared  without  object 
in  view  of  the  law  of  July  1,  1893: 

Considering  that  article  1  of  that  law  has  suspended  from  the  date 
of  its  promulgation  all  pending  suits  begun  against  the  liquidation  by 
bondholders  and  all  other  creditors,  and  all  proceedings  for  securing 
execution  against  the  property,  movable  or  immovable,  of  the  com- 
pany, even  those  in  course  of  being  executed; 


PANAMA  CANAL  TITLE. 


143 


Considering  that  this  provision  has  for  its  object,  as  show  n  besides 
by  what  led  up  to  it,  to  prevent  certain  creditors  from  creating  rights 
of  preference  as  against  other  creditors,  and  to  make  certain  the  prog- 
ress of  the  liquidation  by  reserving  to  the  liquidator  alone  the  right 
to  realize  the  assets  for  the  benehl  of  all.  in  view  cither  of  a  legal 
division  among  all  creditors  or  of  the  contribution  in  the  common 
interest,  to  a  new  association,  to  be  made  under  the  supervision  of 
the  mandataire  of  the  bondholders  and  the  courts,  and  within  the  con- 
ditions specified  by  articles  LO  and  1 1  of  the  law; 

That  the  proceedings  either  of  execution  or  preservation  of  means 
of  execution,  taken  before  that  law,  an4  then  altogether  without  object; 

That  the}^  can  not  produce  any  effect  whatever  in  favor  of  those 
who  have  instituted  them;  that  the  defendant  (Mile.  Joreau)  admits  that 
she  has  no  right  of  preference  as  to  the  sums  garnisheed,  and  that  the 
liquidator  has  not  the  right  to  pay  her; 

That  she  does  not  demand  to  have  the  validity  of  her  garnishment 
proceed i ngs  declared ; 

That  she  maintains,  nevertheless,  that  the  garnishment  exists,  and 
that,  without  opposing  the  distribution  among  all  the  creditors  of  the 
values  garnisheed,  she  objects  to  the  liquidator's  disposing  of  them  in 
any  other  manner; 

Considering  that  this  pretension  is  condemned  by  the  formal  and 
absolute  prescription  of  the  first  article  of  the  law  of  July  1,  1893; 

That  a  proceeding  suspended  can  not  have  any  effect;  that  conse- 
quently, aside  from  the  power  which  will  belong  to  them  at  the  time 
of  the  distribution,  to  produce  as  legitimate  expenses,  acts  clone  under 
the  reign  of  the  old  law,  the  creditors  opposing  here,  like  the  credi- 
tors resorting  to  garnishment,  have  no  other  rights  than  that  which 
article  11  recognizes  for  all  creditors  indiscriminately,  namely,  that  of 
presenting  to  the  tribunal,  in  the  course  of  any  proceeding  for  approval 
(homologation),  the  reasons  which  may  appear  to  them  good  for 
opposing  the  adoption  of  such  or  such  mode  of  realizing  the  assets,  or 
the  contribution  to  an  association  of  those  assets; 

That  it  is  proper,  consequently,  without  its  being  necessary  to  pro- 
nounce release  from  the  garnishee  proceedings,  to  decide  that  they  are 
altogether  without  object. 

On  the  additional  demand  of  Gautron  for  damages,  considering,  etc. 

*  *  *  *  *  *  * 

For  these  reasons  declares  that  the  proceedings  of  the  defendant, 
having  been  suspended  by  the  law  of  July  1,  1893,  the  garnishment 
has  become  altogether  without  object  and  can  not  produce  any  effect; 
declares  consequently  that  it  constitutes  no  obstacle  to  the  delivery 
of  the  sums  garnisheed  to  the  liquidator. 

*  *  *  *  *  *  * 


EXHIBIT  12. 

EVIDENCE  AS  TO  PLEDGES  OF  PANAMA  KAILROAD  SHARES. 

Paris,  August  <29,  1902. 
Certificate  showing  that  all  the  dividends  paid  upon  the  shares  of 
the  Panama  Railroad  Company  have  gone  into  the  treasury  of  the 
New  Panama  Canal  Company,  and  that  all  votes  in  the  meetings  of  the 


144 


PANAMA  CANAL  TITLE. 


Panama  Railroad  Company  represented  by  said  shares  have  been  cast 
by  the  New  Panama  Canal  Company,  without  any  exception. 

I  certify  by  these  presents  that  all  the  dividends  declared  and  paid 
by  the  Panama  Railroad  Company  since  the  month  of  October,  L894, 
upon  all  tin1  shares  transferred  by  the  liquidator  to  the  new  company 
in  virtue  of  the  sale  made1  by  article  5,  section  4,  of  the  by-laws,  have 
been  paid  to  the  New  Panama  Canal  Company  and  have  not  remained 
in  the  possession  of  the  liquidator. 

The  dividends  paid  by  the  Panama  Railroad  to  the  liquidator  on  the 
shares  pledged  in  his  hands  have  been  paid  immediately  by  the  liqui- 
dator to  this  company,  as  results  from  letters  of  April  9,  1901,  and 
June  16,  11)02. 

1  certify  likewise  that  during  all  the  time  since  the  month  of  Octo- 
ber, 1894,  all  the  votes  to  be  cast  at  the  general  meetings  of  the  said 
company  for  those  shares  have  been  cast  exclusively  by  the  new  com- 
pany, and  that  the  liquidator  has  never  been  called  to  vote  as  owner  of 
those  shares. 

Marie, 

The  Chief  of  General  Accounts. 
For  the  liquidator,  by  procuration: 

Henry  Soud. 


Paris,  June  16,  1902. 

New  Panama  Canal  Company,  Paris. 

Mr.  President:  I  have  the  honor  to  transmit  to  you  herewith 
inclosed,  after  having  made  it  payable  to  the  order  of  your  honorable 
compan}r,  a  check  for  $137,068,  sent  to  me  by  the  Panama  Railroad 
Company  for  the  dividend  on  the  shares  which  }Tou  have  deposited  as 
a  pledge,  in  virtue  of  our  agreement  of  March  24,  1900. 

Please  acknowledge  receipt. 

Accept,  Mr.  President,  the  assurance  of  my  distinguished  consid- 
eration. 

Gautron,  The  Liquidator. 

Certified  as  correct. 

The  chief  of  general  accounts: 

Marie. 


Paris,  April  9,  1901. 

New  Panama  Canal  Company,  Paris. 

Mr.  Dire.ctor-General:  I  have  the  honor  to  transmit  to  you, 
after  having  made  it  payable  to  the  order  of  your  honorable  company, 
a  check  for  $137,068,  addressed  to  me  by  the  Panama  Railroad  Com- 
pany, as  dividend  of  2  per  cent  upon  the  shares  which  you  have 
deposited  with  -me  as  a  pledge,  in  accordance  with  our  agreement  of 
March  24,  1900. 

Please  acknowledge  receipt,  and  accept,  Mr.  Director-General, 
assurance  of  my  distinguished  consideration. 

Gautron,  TJie  Liquidator. 

Certified  as  correct. 

The  chief  of  general  accounts: 

Marie. 


PANAMA   CANAL  TITLE. 


145 


AGREEMENT  OF  A  PR]  L  27,  L895,  BETWEEN  THE  LIQUIDATOR,  THE 
NEVV  PANAMA  CANAL  COMPANY,  AND  THE  COMPTOIK  NATIONAL 
D'ESCOMPTE  CONCERNING  PANAMA  RAILROAD  SHARES. 

Between  the  undersigned 

L°  M.  Jean  Pierre  Gautron,  judicial  administrator  of  the  civil  tri- 
bunal of  the  Seine,  residing  at  No.  13,  Rue  Tronchet,  Paris, 

Acting  in  the  name  of  and  as  liquidator  for  the  Compagnie  Uni- 
verselle  du  ('anal  [nteroc^anique  de  Panama,  whose  head  office  is 
situated  No.  63  bis  Hue  de  la  Victoire,  Paris, 

Appointed  to  that  office  by  judgment  given  by  the  chamber  of  the 
counsel  of  the  tribunal  of  the  Seine  the  21st  day  of  July,  1893, 

On  the  one  part 

2°  The  New  Panama  Canal  Company,  an  anonymous  company,  hav- 
ing its  head  office  No.  7,  Rue  Louis-le-Grand,  Paris, 

Represented  by  Messrs.  Chanove  and  Jonquiere,  administrators, 
who  are  specially  empowered  to  sign  this  present  contract  by  a  reso- 
lution adopted  by  the  council  of  administration  of  said  company  dated 
fifth  March  last,  copy  of  which  is  hereto  annexed. 

Of  the  second  part 

3°  And  the  Comptoir  National  d'Escompte,  an  anonymous  company, 
whose  head  offices  arc  situated  No.  14,  Rue  Bergere,  Paris, 

Represented  by  M.  Th.  Berger,  a  member  of  the  council  of  admin- 
istration, and  M.  Alexis  Rostand,  manager,  who  is  specially  empow- 
ered to  sign  this  present  agreement  by  a  resolution  adopted  by  the 
council  of  administration  of  the  said  company,  dated  March  thirteenth 
last,  copy  of  which  is  hereto  annexed, 

Of  the  third  part. 

With  a  view  to  assuring  the  fulfillment  of  the  conditions  under 
which  M.  Gautron  has  transferred  to  the  new  company,  in  accordance 
with  the  terms  of  its  by-laws,  received  b}r  Messrs.  Lefebvre  and 
Champetier  de  Ribes,  notaries  of  Paris,  the  26th  June,  1894,  68,534 
shares  in  the  Panama  Railroad,  and  to  provide  against  any  inconven- 
ience which  might  arise  from  a  conflict  between  the  French  and  Ameri- 
can laws — 

It  has  been  agreed  as  follows: 

Article  1. 

M.  Gautron  and  the  new  company  constitute  as  amicable  depository 
for  the  68,534  shares  of  the  Panama  Railroad  the  Comptoir  National 
d'Escompte  in  Paris,  in  the  name  of  which  the  said  shares  shall  be 
enrolled,  by  virtue  of  the  pure  and  simple  transfers  which  shall  be 
signed  by  M.  Gautron  with  the  briefest  delay  possible. 

Article  2. 

The  Comptoir  National  d'Escompte  shall  collect  the  dividends  and 
remit  the  amount  to  the  new  company  after  deduction  of  the  commis- 
sion which  is  allowable  to  it  and  all  charges  whatsoever  incurred  by 
said  collections. 


8751—02  10 


146 


PANAMA   CANAL  TITLE. 


Article  3. 


The  Comptoir  National  d'Escompte  shall  issue  its  order,  in  the  man- 
ner usual  in  America,  for  the  exercise  of  the  right  of  vote  in  t  be  genera] 
meeting  of  the  Panama  Railroad  Company,  and  for  the  constitution 
of  all  accredited  agents  in  connection  with  said  company,  to  persons 
designated  by  the  New  Panama  (anal  Co..  said  company  bing  at  any 
time  able  to  modify  said  designation  and  having  the  sole  light  to  give 
all  attorneys  or  agents  the  instructions  which  said  company  may  deem 
advisable. 


The  said  shares  shall  remain  deposited  with  the  Comptoir  National 
d'Escompte  during  the  whole  of  the  period  of  nontransferability  stip- 
ulated by  the  by-laws  of  the  new  company. 

In  the  event  of  the  realization  of  the  different  contingencies  provided 
for  by  said  by-laws,  the  Comptoir  National  d'Escompte  undertakes  to 
sign  all  transfers  of  the  68,534shares  in  question  conformably  with  the 
collective  requests  which  will  he  addressed  to  said  Comptoir  National 
d'Escompte  by  the  liquidator  and  the  new  company,  these  requests  and 
these  only  liberating  the  said  Comptoir  National  d'Escompte. 

In  the  event  of  any  disagreement  the  Comptoir  National  d'Escompte 
shall  conform  to  the  decision  of  the  civil  tribunal  of  the  Seine  and  of 
the  court  of  appeal  of  Paris,  to  which  courts  is  given  to  the  extent 
necessary  formal  jurisdiction. 


The  Comptoir  National  d'Escompte  accepts  and  undertakes  to  fulfill 
the  mission  conferred  upon  it  by  the  above  articles. 


As  compensation  for  its  trouble  and  care  the  Comptoir  National 
d'Escompte  shall  be  paid  annually  the  sum  of  two  thousand  francs. 

All  charges  or  disbursements  whatsoever,  especially  judicial  expenses 
resulting  from  the  establishment  of  its  mandate,  as  well  as  all  preju- 
dicial consequences  which  might  arise  from  its  qualit\T  of  apparent 
proprietor  shall  be  paid  over  on  the  first .  demand  of  said  Comptoir 
National  d'Escompte. 

The  whole  shall  be  paid  half  b}T  the  liquidation  and  half  by  the  new 
company,  said  parties  being  guarantee  the  one  for  the  other  with 
respect  to  the  Comptoir  National  d'Escompte. 

Made  in  triplicate  at  Paris,  the  twenty-seventh  day  of  April,  in  the 
year  one  thousand  eight  hundred  and  ninety-five. 

Approved,  the  writing,  Read  and  approved. 

Signed:  J.  Jonquiere.  Signed:  G.  Chanove. 


Article  1. 


Article  5. 


Article  6. 


Approved,  the  writing, 
Signed:  Gautron. 


Read  and  approved. 


A  Director, 

Signed:  Berger. 


Comptoir  National. 
d'Escompte  de  Paris. 
The  Manager, 


Signed:  Alexis  Rostand. 


PANAMA    CANAL  T1TLK. 


147 


AGRKKMEXT  OF  MARCH  21,  HUM),  III  T\\  1  :i  N  THE  LIQUIDATOR  AND 
TUK  XKW  PANAMA  CANAL  COMPANY  CONOKKNING  PANAMA  RAIL- 
ROAD SHARKS. 

Between  the  undersigned: 

M.  Choron,  in  fche  name  and  as  representative  of  the  New  Panama 
Canal  Company,  an  anonymous  company,  whose  principal  office  is  ;it 
Paris,  Rue  Louis-le-Grand,  No.  7; 

M.  Choron,  specially  authorized  for  the  purposes  of  these  presents, 
by  action  of  the  council  of  administration  of  the  said  New  Panama  (  anal 
Company,  copy  of  which  has  been  hereto  annexed, 

Of  the  one  part. 

And  M.  Jean  Pierre  Gautron,  judicial  administrator  of  the  civil 
tribunal  of  the  Seine,  acting  in  the  name  of  and  as  liquidator  of  the 
Compagnie  Oniverselle  du  Canal  [nteroc^anique,  whoso  office  is  at 
Paris.  Rue  de  la  Chausee  d'Antin,  No.  42, 

Of  the  other  part. 

Has  been  settled,  agreed,  and  reviewed  and  stated  beforehand,  as 
follows: 

The  by-laws  of  the  Compagnie  Nouvelle  du  Canal  de  Panama  were 
executed  before  Me.  Lefcbvre,  at  Paris,  June  26th,  ls(,»4. 

A  party  to  the  said  by-laws  was  M.  Gautron,  in  his  character  as 
liquidator,  who  made  to  the  said  Compagnie  Nouvelle  du  Canal  de 
Panama  the  transfer  and  contributions  stated  in  article  5,  paragraphs 
1,  2,  3  and  4. 

This  transfer  and  these  contributions  were  made  under  certain 
reservations  and  conditions,  expressed  in  the  same  article  5,  to-wit, 
especially; 

3d.  The  rights  of  every  nature  in  the  Panama  Eailroad,  belonging  to  the  liquida- 
tion and  contributed  by  M.  Gautron  under  section  4  of  this  article  shall  become 
the  property  of  the  present  company  from  and  after  the  stockholders'  meeting 
provided  for  by  article  75  hereof,  without  any  pecuniary  compensation,  but  upon 
the  expressed  condition  that  the  canal  be  constructed  within  the  time  fixed  by  the 
agreement  of  concession.  Upon  default  in  completion  within  such  time,  said  rights 
shall  revert  to  the  liquidation. 

If,  contrary  to  all  expectation,  the  meeting  in  question  should  not  take  the  neces- 
sary action  for  the  completion  of  the  canal,  or  if  the  course  of  action  adopted  by  the 
meeting  can  not  be  carried  out,  the  said  rights  in  the  railroad  shall  remain  the  prop- 
erty of  the  present  company,  but  it  shall  pay  to  the  liquidation  the  sum  of  20  mil- 
lion francs  by  way  of  indemnity,  and  the  share  of  profits  set  apart  for  the  liquidation 
shall  be  half  the  profits  of  the  present  company,  without  other  deductions  than 
those  provided  in  sees.  2  and  3  of  article  51  hereof. 

Now,  article  75  provides  that — 

When  the  amounts  expended,  as  well  for  the  work  done  upon  the  canal  as  for  the 
discharge  of  the  burdens  resulting  from  the  contribution  of  M.  Gautron,  shall 
reach  about  one-half  of  the  cash  capital  of  the  company  at  the  minimum,  a  special 
technical  commission  thereto  appointed  at  a  proper  time  shall  pronounce  upon  the 
results  obtained  from  the  work  already  done  and  upon  the  conclusions  to  be  drawn 
therefrom  as  to  the  remainder  of  the  enterprise. 

This  commission  shall  be  composed  of  two  members  appointed  bv  the  council  of 
administration  of  the  present  company,  and  of  two  persons  appointed  by  the  liqui- 
dation of  the  old  Compagnie  Universelle  du  Canal  Interoceanique.  These  four 
members  shall  appoint  a  fifth,  who  shall  be  president  of  the  commission,  and  if  they 
can  not  agree  this  president  shall  be  appointed  by  the  president  of  the  tribunal  of 
commerce  of  the  department  of  the  Seine. 

The  council  of  administration  shall  be  required  to  make  public  the  opinion  of 
this  commission,  and  to  call  an  extraordinary  general  meeting  of  stockholders  in 
the  manner  provided  in  articles  61  and  62  hereof. 

This  meeting  shall  consider  the  ways  and  means  tending  to  insure  the  completion 
of  the  work  and  the  stipulations  contained  in  article  5,  sec.  4,  No.  3,  hereof. 


148 


PANAMA  CANAL  TITLE. 


The  parties  explain,  for  clearness,  that  the  time  mentioned  in  para- 
graph 3  of  article  5  of  the  by-laws,  and  which  is  fixed  by  the  agree- 
ment of  concession,  means  the  time  granted  and  to  be  granted  by  the 
agreement  of  concessions  and  by  the  various  agreements  of  extension. 

Two  of  the  conditions  set  forth  in  the  article  above  quoted  have 
been  fulfilled,  to-wit:  The  expenditure  of  one-half  the  corporate  capi- 
tal, at  the  minimum,  and  the  formation  of  the  technical  commission. 
This  commission  went  to  the  Isthmus,  there  to  proceed  to  the  perform- 
ance of  its  duties,  and  the  results  of  the  study  to  which  it  devoted  itself 
are  clearly  favorable  to  the  completion  of  the  canal. 

The  Compagnie  Nouvelle  du  Canal  de  Panama  is,  therefore,  ap- 
proaching the  time  when  it  must  face  tin1  conditions  under  which,  after 
publication  of  the  report  of  the  commission,  it  will  have  to  call  the 
extraordinary  general  meeting  provided  for  by  article  7.")  of  the  by- 
laws of  incorporation. 

But  it  is  of  opinion  that,  under  the  present  circumstances,  there 
would  be  the  greatest  advantage  in  postponing  the  calling  of  this 
meeting  and  deferring  the  final  decisions  provided  for  by  article  75 
above1  quoted. 

M.  Gautron,  in  his  character  as  liquidator,  moved  by  the  idea  which 
has  always  guided  the  liquidators  of  the  Compagnie  Universelle  du 
Canal  Interoceanique  in  their  efforts  to  assure  the  completion  of  the 
enterprise,  efforts  constantly  encouraged  by  the  majority  of  the  cred- 
itors, by  the  public  authorities,  and  by  the  courts,  considers  that  it  is 
to  the  true  interest  of  the  liquidation  to  accept  the  views  of  the  Com- 
pagnie Nouvelle. 

In  this  state  of  the  facts  the  parties  have  united  upon  the  agree- 
ments hereinafter  set  forth: 

Art.  1. 

The  assembling  of  the  general  meeting,  called  to  take  final  action, 
in  conformity  with  article  75  of  the  by-laws  of  the  Compagnie  Nou- 
velle, may  be  postponed  for  not  more  than  three  years  from  the  date 
on  which  these  presents  shall  become  binding. 

The  Compagnie  Nouvelle  can  not  delay  the  calling  of  this  meeting 
without,  beforehand,  coming  to  an  agreement  with  the  liquidator  on 
this  point. 

Art.  2. 

In  case  either  of  the  two  situations  mentioned  in  the  second  para- 
graph, §  3  of  article  5  of  the  by-laws  should  arise,  the  credit  of  20 
millions  w  hich  would  exist  for  the  benefit  of  the  liquidation  shall  be 
paid,  principal  and  interest,  by  means  of  the  income  of  all  the  rights 
and  part  interests  belonging  at  that  time  to  the  Compagnie  Nouvelle 
in  the  railroad  from  Panama  to  Colon,  operated  by  an  American  com- 
pany, called  the  Panama  Railroad  Company,  whose  principal  office  is 
at  New  York,  and  at  latest  in  a  period  of  15  }Tears  from  the  date  when 
the  credit  arises. 

The  credit  of  20  millions  in  question  shall  bear  three  per  cent  interest 
from  said  date. 

Art.  3. 

To  insure  the  payment  of  the  credit  to  the  liquidation,  principal  and 
interest,  the  Compagnie  Nouvelle  de  Panama  undertakes  to  give  as  a 


PANAMA  CANAL  TITLE. 


149 


pledge  (nantissement)  for  the  benefit  of  the  liquidator,  the  rights  and 
part  interests  belonging  to  it  in  the  railroad  from  Panama  to  (olon  as 
they  are  set  forth  in  article  5  of  the  by-laws,  and  to  apply  to  the  pay- 
ment of  this  credit  tin*  entire  revenue  arising  from  the  rights  and 
part  interests  in  question,  after  deducting  only  the  expenses  necessary 
t'or  the  running  of  the  debtor  company,  which  deductions  shall  be 
fixed  at  the  beginning  of  each  fiscal  period,  by  agreement  between  it 
and  the  liquidator,  after  verification  of  the  accounts  of  the  preceding 
fiscal  period. 

These  presents  shall  not  become  binding  until  after  the  regular 
pledging,  to  the  satisfaction  of  the  liquidator,  of  this  security  which 
shall  be  applied  to  the  benefit  of  the  liquidation,  until  full  payment 
of  the  credit  of  20  millions,  principal  and  interest. 

Art.  4. 

Until  full  payment  of  the  credit  to  the  liquidator,  principal  and  inter- 
est, all  revenues  arising  from  the  Panama  Railroad  shall  be  applied, 
with  the  consent  of  M.  Gautron,  to  the  extinguishment  of  said  credit. 

As  soon  as  M.  Gautron's  credit  shall  have  been  extinguished,  an 
extraordinary  general  meeting  of  the  Compagnie  Nouvelle  shall  be 
called  to  reduce  the  capital  of  this  company  to  a  figure  equal  to  the 
amount  of  actual  assets  at  that  time,  so  as  to  enable  said  company 
immediately  to  dispose  of  and  distribute  its  net  income,  as  well  for  the 
benefit  of  the  liquidator  as  for  that  of  the  shareholders. 

In  conformity  with  the  second  paragraph  of  section  3  of  article  5  of 
the  by-laws  of  the  Compagnie  Nouvelle,  taken  in  connection  with  article 
51,  the  sinking  fund,  for  the  benefit  of  the  shareholders,  for  the  capital 
stock  of  the  Compagnie  Nouvelle  du  Canal  de  Panama,  will  not  form 
part  of  the  charges  to  be  deducted  from  the  annual  income  of  the 
enterprise. 

Art.  5. 

No  alteration  in  previous  agreements  is  made,  other  than  such  as 
result  from  the  present  contract,  which  annuls  and  supersedes  the 
agreement  made  under  date  of  August  9th,  1899,  and  approved  by  the 
council  of  administration  at  its  meeting  of  August  30th,  1899. 

Art.  6. 

The  present  agreement  shall  not  become  binding  until  after  being 
submitted  to  the  approval  of  a  general  meeting,  called  under  the  pro- 
visions of  articles  60,  61,  and  62  of  the  by-laws,  and,  thereafter,  to  the 
approval  of  the  civil  tribunal  of  the  Seine. 

Art.  7. 

The  expenses  of  recording,  approval,  and,  in  general,  all  expenses 
and  fees  which  the  present  contract  may  occasion,  shall  be  borne  by 
the  Compagnie  Nouvelle  du  Canal  de  Panama. 

Done  in  duplicate  at  Paris,  March  twenty -fourth,  one  thousand  nine 
hundred. 

The  writing  approved.  The  writing  approved. 

Signed:  L.  Choron.  Signed:  Gautron. 


150 


PANAMA  CANAL  TITLE. 


RATIFICATION  OF  THE  AGREEMENT  OF  MARCH  24,  1900,  BY  STOCK- 
HOLDERS' MEETING  OF  NEW  COMPANY. 

NEW  PANAMA  CANAL  COMPANY. 

Taken  from  the  report  of  the  extraordinary  general  meeting  of 
stockholders  of  the  New  Panama  Canal  Company,  held  July  7,  L900, 
at  Paris,  in  the  building  of  the  Philosophical  Association  (Socie*t6s 
Savant  es),  8  Rue  Danton. 

RESOLUTION. 

The  general  meeting,  after  having  heard  the  report  of  the  council 
of  administration,  approves  the  contract  made  between  the  new  com- 
pamT  and  the  Liquidation  of  the  Universal  Company  of  the  interoceanic 
Canal  of  Panama,  dated  March  24,  1900,  and  authorizes  the  postpone- 
ment of  tin1  extraordinary  general  meeting  provided  for  by  article  75 
of  the  by-laws  to  a  time  not  later  than  three  years  from  the  date  when 
the  said  contract  shall  become  definitive;  it  authorizes  also  the  coun- 
cil of  administration  to  incur  the  expenses  necessary  for  the  continua- 
tion of  the  enterprise  until  such  meeting  shall  take  place. 

Certified  to  be  in  conformity  with  the  original. 

M.  Bo, 

Pn  sidi  nt  of  th<  ( 'ouncil  of  Administration. 

DECREE  APPROVING  THE  AGREEMENT  OF  MARCH  24,  1900. 

[Official  Journal  of  the  French  Republic,  Tuesday,  August  7.  1900.] 

Publication  made  by  M.  Gautron,  liquidator  of  the  Universal  Com- 
pany of  the  Interoceanic  (anal  of  Panama,  in  conformity  with  articles 
10  and  11  of  the  law  concerning  the  liquidation  of  the  said  company 
of  July  1,  1893. 

Public  session  of  the  first  chamber  of  the  civil  tribunal  of  first 
instance  of  the  department  of  the  Seine  on  Wednesday,  August  1, 1900. 

The  tribunal:  Upon  the  request  presented  by  Gautron,  acting  in 
his  character  of  liquidator  of  the  Universal  Company  of  the  Inter- 
oceanic Canal  of  Panama. 

The  said  request  signed  *'De  Bieville,"  his  solicitor,  and  reading 
thus:  4,To  the  president  and  judges  composing  the  first  chamber  of 
the  civil  tribunal  of  the  Seine,  etc.," 

And  the  documents  having  been  produced; 

Having  seen  the  order  of  the  president  dated  July  30,  1900,  put  at 
the  end  of  the  said  request  and  reading:  "'That  this  be  communicated 
to  the  attorney  of  the  Republic  in  his  office  and  we  commit  to  M. 
Laporte.  vice-president,  to  make  his  report,  Paris,  July  3,  1900. 
Signed.  Baudouin;" 

Having  seen  the  written  conclusions  of  the  attorney  of  the  Republic 
also  put  at  the  end  of  the  said  request,  the  said  conclusions  reading 
thus:  "The  attornev  of  the  Republic  does  not  oppose,  Paris,  August 
1,  1900.    Signed,  Servin;" 

Having  seen  articles  10  and  11  of  the  law  of  July  1,  1893; 

After  having  heard  at  the  session  M.  Laporte,  vice-president,  in  his 
report,  and  M.  Servin,  substitute  of  the  attorne}T  of  the  Republic,  in 
his  conclusions; 

After  having  deliberated  according  to  law; 

Considering  that  the  agreement  in  question,  which  the  extraordinary 
general  meeting  of  stockholders  of  the  new  company  of  the  Panama 
Canal  has,  moreover,  approved  by  resolution  of  July  7,  of  the  current 


PANAMA  CANAL  TITLE. 


151 


year,  appears  to  be  in  conformity  with  the  interests  of  the  liquidation, 
and  advantageous  for  the  company; 

That,  consequently,  it  is  proper  to  give  it  approval. 

For  these  reasons, 

Approves,  purely  and  simply,  the  agreement  entered  into  between 
the  liquidator  of  the  Universal  Company  of  the  [nteroceanic  (anal  of 
Panama  and  the  new  company,  dated  March  1900,  in  order  that 
this  agreement  may  be  executed  according  to  its  form  and  tenor. 

Done  and  adjudged  by  MM.  Baudouin,  president;  Laporte,  vice- 
president;  Le  Berquier,  judge.  In  the  presence  of  MM.  Chauvin, 
substitute  judge;  Servin,  substitute,  assisted  by  Lasnier,  clerk. 

Copy  conforming  to  the  original. 

(Signed)  A.  de  Bieville. 


EXHIBIT  13. 

LIST  AND  SPECIMENS  OF  BONDS. 
List  of  different  bond  issues  of  the  Universal  Company  of  the  Interoceanic  Canal. 


Dates  of  issues. 


Kind  of  bonds 


Number 
of  bonds 
offered. 


Number 
of  bonds 

sub- 
scribed. 


Cost  of 
issue. 


Inter- 
est. 


Remarks. 


A— Sept. 
B— Oct. 


7, 1882 
3,1883 


C— Sept.  25,1884 


D— Aug.  3,1886 
E— July  26,1887 

F— Mar.  14,1888 


5  per  cent 
3  per  cent 


f4  per  cent 
I  do ... 


250, 000 
600,000 


57, 3S7 


New  

New,  second 
series. 

New,  third  se- 
ries. 


500, 000 
500,000 


G— June  26,1888 
H — July  27,1889 


Bonds,  lottery  2, 000. 000 
Lottery  bonds  b  357, 894 


Francs. 
250,000  437.50 
600, 000       285. 00 


387, 387 
72,375 


458, 802 
25*.  t-87 


3.r>0, 000       89, 802 


849, 205 
478,  922 


a 333. 00 
Divers. 


450. 00 
440. 00 


4G0. 00 


360. 00 
Divers. 


30 


To  the  issue  of  Sept.  25, 1884, 
there  were  subscribed  218,- 
245  bonds  only.  The  re- 
mainder, viz,  69,142  bonds, 
were  negotiated  on  the 
stock  exchange.  Later,  in 
1886,  72,375  bonds  of  the 
second  series  of  the  same 
kind,  created  by  a  decision 
of  Apr.  9,  1886,  were  also 
placed  at  the  stock  ex- 
change. 


The  number  of  bonds  sub- 
scribed or  placed  was  112,- 
483.  Making  use  of  the 
right  given  by  the  condi- 
tions of  subscription  to  the 
lottery  bonds,  some  sub- 
scribers exchanged,  22.681 
bonds,  third  series,  for  lot- 
tery bonds,  which  brought 
89,802,  the  number  of  bonds 
of  the  third  series. 

These  lottery  bonds  were  is- 
sued in  virtue  of  the  law  of 
July  15,  1889;  they  make 
part  of  the  two  millions  of 
bonds  created  in  June, 
1888,  but  without  interest. 
Besides  the  issue  of  July 
27,  1889,  the  liquidators 
have  transferred  some  lot- 
tery bonds  in  payment  to 
some  creditors,  and  espe- 
cially to  the  contractors. 
It  is  this  that  explains  the 
difference  between  the 
number  of  bonds  placed 
and  the  number  of  bonds 
offered  for  subscription. 


a  And  divers. 


&To  be  taken  in  payment  of  lottery  bonds. 

Paris,  August  25,  1902. 

Certified  to  be  exact. 

Liquidator  of  the  Universal  Company  by  procuration: 

(Signed)  Henry  Boudet. 


152 


PANAMA  CANAL  TITLE. 


Specimens  of  bonds  issued. 

Printed  specimens  of  each  and  all  of  the  issues  of  bonds  were  brought 
from  Paris,  and  are  described  as  follows: 

No.  1,  bonds,  5  per  cent,  issue  of  September  7,  1882. 

No.  2,  bonds,  3  per  cent,  issue  of  October  3,  1883. 

No.  3,  bonds,  4  per  cent,  issue  of  September  25,  1884. 

No.  4,  bonds,  new,  issue  of  August  3,  1886. 

No.  5,  bonds,  new,  second  series,  issue  of  July  26,  1887. 

No.  6,  bonds,  new,  third  series,  issue  of  March  14,  1888. 

No.  7,  bonds,  lottery,  issue  of  June  26,  1888. 

No.  8,  lottery  bonds,  issue  of  July  27,  1889. 

Upon  the  bonds  of  issue  No.  1  the  language  used  is: 

Universal  Company  of  the  Interoceanic  Canal  of  Panama.  Anonymous  Company. 
Company  capital,  300,000,000  of  francs.  Issue  of  250,000  bonds,  authorized  by  the 
general  meeting  of  29  June,  1882.  Bonds  of  500  francs,  5  per  cent,  to  the  bearer. 
Redeemable  at  par  in  75  years.  No.  .  Paris,  15  January,  1883.  By  authori- 
zation: An  administrator:  The  president-director:  Ferd.  de  Lesseps. 

On  the  coupons  of  the  same  we  find: 

Universal  Company  of  the  Interoceanic  Canal  of  Panama.  Bond  No.  .  Cou- 
pon of  12  francs  50  centimes,  falling  due  the  15  July,  1899,  etc. 

On  the  back  of  the  bond  is  a  table  of  sinking-fund  payments,  with 
dates  of  payment  and  the  numbers  of  bonds  to  be  redeemed. 

On  bond  issue  No.  2  the  wording  is  practically  the  same,  the  issue 
being  of  600,000  bonds  at  3  per  cent.  There  is  a  similar  table  as  to 
sinking  fund  on  the  back. 

The  language  of  the  third  issue  is  practically  the  same,  the  issue 
being  of  387,387  bonds  at  4  per  cent.  A  sinking-fund  table  is  also 
found  on  the  back. 

The  language  of  the  fourth  issue  is  practically  the  same,  except  that 
it  states  that  an  issue  of  458,802  bonds  was  authorized  by  the  general 
meeting  of  July  29, 1885,  and  that  the  bond  is  a  new  one  and  is  redeem- 
able at  1,000  francs. 

The  fifth  series  contains  language  similar  to  the  fourth,  except  that 
on  the  back,  instead  of  the  sinking  fund  table,  we  find  the  following: 

Extract  taken  from  the  prospectus  of  issue:  The  new  bonds  of  the  second  series 
are  redeemable  at  1,000  francs  in  48  years,  by  drawings  every  two  months  (six 
drawings  per  year),  the  15  September,  15  November,  15  January,  15  March,  15  May, 
and  15  July. 

But  the  first  drawing  will  take  place  on  the  30  September,  1887,  instead  of  the  15. 

After  the  first  year  6,000  bonds  will  be  redeemed;  that  is,  1,000  bonds  at  each 
drawing;  the  number  of  bonds  redeemed  will  increase  progressively  every  year 
until  the  end  of  the  operation. 

The  language  of  the  sixth  issue  has  the  following: 

Universal  Company  of  the  Interoceanic  Canal  of  Panama.  Anonymous  company, 
with  capital  at  300,000,000  of  francs,  and  Civil  Company  for  Sinking  the  Bonds  of 
the  Panama  Canal.  Issue  of  March,  1888,  with  responsibility  limited  to  what  is  put 
into  the  company.  Issue  of  350,000  bonds,  authorized  by  the  general  meeting  of  29 
July,  1885.  New  bond  to  bearer,  payable  at  1,000  francs.  The  reimbursement 
at  1,000  francs  is  guaranteed  by  certificates  of  French  Government  annuities  (rente 
francaise),  bought  by  the  Civil  Company  of  Sinking,  formed  of  all  the  subscribers  of 
the  present  loan;  according  to  the  terms  of  the  document  drawn  up  before  Me. 
Champetier  de  Ribesand  his  colleague,  notaries  at  Paris,  3  March,  1888. 

On  the  back  of  the  bond  appears  the  following: 

Taken  from  the  by-laws  of  the  Civil  Company  of  Sinking,  according  to  the  docu- 
ment received  by  Me.  Champetier  de  Ribesand  his  colleague,  notaries  at  Paris. 


PANAMA  CANAL  TITLE. 


153 


Article  first.  There  is  formed,  by  these  presents,  between  the  appearere,  a  civil 
company. 

There  shall  be  on  the  same  footing  as  the  appearers,  as  members  of  this  Civil  Com- 
pany, all  the  future  subscribers  to  the  issue  of  March,  1888,  of  the  bonds  of  the 
company  of  the  Interoceanic  Canal  of  Panama. 

Subscription  to  every  bond  of  that  issue  will  carry  the  adhesion  of4the  subscriber  to 
the  present  by-laws  and  his  admission  as  a  member  of  the  company,  as  stipulated  in 
the  prospectus  of  the  issue. 

Art.  2.  The  company  has  for  its  object: 

To  syndicate  the  subscribers  of  the  new  issue  of  the  company  of  the  Panama  Canal; 
to  take  charge  of  the  sinking  of  the  said  loan  by  means  of  the  retention  which  the 
subscriber  will  make  upon  each  bond  by  him  subscribed  of  a  sum  of  70  francs  28  cen- 
times, which  he  will  pay  to  the  Civil  Company; 

And  by  means  of  the  capitalization  of  interest,  to  itself  perform  the  operation 
of  reconstituting  the  capital  and  the  business  of  redemption  of  the  bonds  issued  by 
means  of  a  drawing  by  lot. 

Consequently: 

Upon  the  capital  of  issue  of  each  new  bond  the  company  will  receive  the  sum  of 
389  francs  72  centimes,  and  the  Civil  Company  70  francs  28  centimes,  destined  to  sink 
the  loan. 

Art.  3.  The  company  will  have  for  its  name: 

Civil  Company  for  Sinking  the  Bonds  of  the  Panama  Canal,  issue  of  March,  1888, 
with  responsibility  limited  to  what  is  put  into  the  company. 

******* 

Art.  6.  The  contribution  of  each  associate  is  limited  to  his  putting  in  of  70  francs 
28  centimes  per  bond,  which  will  be  furnished  at  dates  above  fixed;  beyond  that 
every  call  for  funds  is  prohibited. 

In  any  event,  a  member  can  not  be  responsible  to  third  persons  beyond  what  he 
thus  puts  in. 

The  company  funds  are  made  up  of  the  combination  of  the  sums  received  by  the 
company  upon  each  of  the  350,000  bonds  offered  for  subscription.  If  all  the  35*0,000 
bonds  are  not  subscribed,  the  company  funds  will  be  reduced  accordingly. 

The  seventh  series,  that  of  the  lotteiw  bonds,  (and  the  eighth  series 
is  substantially  identical,  with  the  exception  that  it  has  stamped  upon 
it  the  words  4 fc  Certificate  issued  in  virtue  of  the  law  of  15  July,  1889; 
not  productive  of  interest,"  with  the  title  of  the  liquidator  of  the  old 
company,  and  the  signature  of  Brunet  by  procuration)  contains  the 
following: 

Universal  Company  of  the  Interoceanic  Canal  of  Panama.  Anonvmous  company 
with  a  capital  of  300,000,000  of  francs,  divided  into  600,000  shares  of  500  francs;  and 
civil  company  with  responsibility  limited  to  the  company  capital  for  the  sinking  of 
the  lottery  bonds  of  the  Panama  Canal,  issue  of  26  June,  1888.  Loan  of  720,000,000. 
Loan  authorized  conformably  with  the  provisions  of  the  law  of  21  May,  1836,  by  the 
law  of  8  June,  1888,  but  without  any  guarantee  or  responsibility  of  the  State.  Pub- 
lic subscription  to  2,000,000  lottery  bonds,  carrying  15  francs  per  year,  payable 
semiannually  the  1st  of  December  and  the  1st  of  June  of  each  year,  and  redeemable 
by  lot,  or  at  400  francs,  within  the  maximum  time  of  99  years.  The  redemption  of 
400  francs  and  the  payment  of  the  lots  Mill  be  guaranteed  by  a  deposit  of  rentes 
francaise  [Government  annuities],  or  of  other  obligations  [titres]  guaranteed  by  the 

French  Government.    Provisional  certificate  to  the  bearer  negotiable.    No.  . 

Of  an  obligation  of  a  paid-up  bond  of  60  francs. 


The  Universal  Company  of  the  Interoceanic  Canal  has  received   50 

The  Civil  Sinking  Company   10 

The  amount  of  capital,  to  wit,  300  francs,  are  to  be  paid  on  the  dates  and  in  the 
proportions  shown  opposite  in  such  a  manner  that  on  each  of  the  bonds  en- 
tirelv  free  [paid  up],  the  part  of  the  Universal  Company  of  the  Interoceanic 

Canal  will  be   300 

And  that  of  the  Civil  Sinking  Company   60 


This  last  sum,  being  destined  to  assure  the  payment  of  the  lots  and  to  constitute 
the  sinking  capital  at  400  francs  of  all  bonds  regularly  freed  in  conformity 
with  the  terms  of  the  prospectus  of  the  issue  and  of  the  by-laws  of  the  Civil 
Company. 

Paris,  the  26  June,  1888. 


154 


PANAMA  CANAL  TITLE. 


On  the  margin  we  read,  with  reference  to  the  n ambers  2,  3,  4,  5,  6, 
7  (alluding  to  payments  of  60  or  45  francs),  the  following: 

Payment  of  60  francs  from  20  to  25  August,  1888. 

Francs. 

Amount  with  stamp   00.  10 

To  be  deducted  interest  at  4fc  on  20  August,  deducting  charges  20 

Net  payment   59.  84 

Of  which  10.00  for  the  civil  company, 
And         49.84  for  the  company. 

Total  59.84. 

Received  bv  . 

The  *  . 

Representing  the  company  of  the  Interoceanic  Canal  and  the  Civil  Company  of 
Sinking. 


On  the  back  of  the  bond  we  find: 

[Extract  from  the  by-laws  of  the  civil  association  for  sinking  the  lottery  bonds,  issue  of  June  26 
ISSN,  according  to  document  made  before  Maitre  Champetier  de  Ribes  and  his  colleague,  notaries  at 
Paris.] 

Article  I.  There  is  formed  by  these  presents  a  civil  company 
among  the  appearers  and  all  the  subscribers  and  future  possessors  of 
lottery  bonds,  to  be  created  by  the  Universal  Company  of  the  Inter- 
oceanic Canal  of  Panama. 

Art.  2.  The  association  has  for  its  object: 

To  syndicate  all  the  subscribers  and  future  possessors  of  the  lottery 
bonds  of  the  approaching  issue  of  the  Universal  Company  of  the  Inter- 
oceanic Canal  of  Panama. 

To  secure  the  payment  of  the  prizes  hereinafter  stated,  and  the 
sinking  of  the  loan  in  ninety-nine  years  at  the  outside  by  means  of 
the  retention  by  the  subscriber  upon  each  bond  subscribed  by  him  of 
a  sum  of  60  francs,  which  he  will  pay  over  to  the  civil  association. 

And  by  means  of  a  capitalizing  of  interest  to  perform  itself  the 
business  concerning  the  prizes  and  the  work  of  reimbursing  the  capi- 
tal upon  the  following  bases: 

Six  drawings  per  year  from  the  16th  of  August.  1888,  to  the  15th 
of  June,  1913  (first  drawing  the  16th  of  August,  1888).  Three  prizes 
of  500,000  francs,  3  prizes  of  250,000  francs,  6  prizes  of  100*000 
francs,  etc. 


August  16:  Francs. 

1  prize   500,000 

1  prize   100,000 

2  prizes  of  10,000  francs   20,  COO 

2  prizes  of  5,000  francs   10,  000 

5  prizes  of  2,000  francs   10, 000 

50  prizes  of  1,000  francs   50,  000 

October  15: 

1  prize   250,000 

1  prize   100,000 

2  prizes  of  10,000  francs   20,  000 

2  prizes  of  5,000  francs   10,  000 

5  prizes  of  2,000  francs   10.  000 

50  prizes  of  1,000  francs   50,  000 


PANAMA   CANAL  TITLE.  155 

December  15: 

1  prize   500,000 

L  prize   100,000 

2  prizes  of  10,000  francs   20,  000 

2  prizes  of  5,000  francs   10,  000 

5  prizes  of  2,000  francs   10,  000 

.")()  prizes  of  1,000  francs   50, 000 

February  15: 

1  prize   250,000 

1  prize    100,000 

2  prizes  of  10,000  francs   20,  000 

2  | >rizes  of  5,000  francs   1 0,  000 

5  prizes  of  2,000  francs   10,  000 

50  i  >rizes  of  1,000  francs   50, 000 

April  15: 

1  prize   500,000 

1  prize   100,000 

2  prizes  of  10,000  francs   20, 000 

2  prizes  of  5,000  francs   10,  000 

5  prizes  of  2,000  francs   10,  000 

50  prizes  of  1,000  francs   50,  000 

June  15: 

1  prize   250,  000 

1  prize     100,000 

2  prizes  of  10,000  francs   20,  000 

2  prizes  of  5,000  francs   10,  000 

5  prizes  of  2,000  francs   10,  000 

50  prizes  of  1 ,000  francs   50,  000 


Per  year.  366  prizes,  amounting  to  3,390,000  francs. 

During  the  first  twenty-five  years  the  drawings  of  bonds  repayable 
with  prizes  will  constitute  the  sole  sinking-. 

Four  drawings  per  year  from  August  16,  1913.  up  to  the  complete 
sinking  of  the  bonds. 

Two  prizes  of  500,000  francs,  2  prizes  of  250,000  francs,  4  prizes  of 
100,000  francs,  etc. 


August  16:  Francs. 

1  prize   500,  000 

1  prize   100,  000 

1  prize   10,  000 

1  prize   5,  000 

5  prizes  of  2,000  francs   10,  000 

50  prizes  of  1,000  francs   50,  000 

November  15: 

1  prize   250,  000 

1  prize   100,  000 

1  prize   10,  000 

1  prize   5,  000 

5  prizes  of  2,000  francs   10,  000 

50  prizes  of  1 ,000  francs   50, 000 

February  15: 

1  prize   500,  000 

1  prize   100,  000 

1  prize   10,  000 

1  prize  :   5,000 

5  prizes  of  2,000  francs   10,  000 

50  prizes  of  1,000  francs   50,  000 

Mav  15: 

1  prize   250,000 

1  prize   100,  000 

1  prize   10,  000 

1  prize   5,  000 

5  prizes  of  2,000  francs   10,  000 

50  prizes  of  1,000  francs   50,  000 


156 


PANAMA   CANAL  TITLE. 


In  this  second  period,  independently  of  the  sinking  which  will  take 
place  each  year  by  the  payment  of  prizes,  the  sinking  at  500  franca 
will  commence  in  L913,  according  to  a  table  which  will  he  drawn  up 
by  the  council  of  mandataires  of  the  civil  association  and  the  Panama 
Canal  Company. 

The  reimbursement  at  400  francs  of  the  bond  drawings  and  prize  is 
included  in  the  payment  of  the  prize  and  not  added  thereto. 

Art.  5.  The  association  takes  the  name  of  "The  Civil  Association, 
with  responsibility  limited  to  the  capital  invested,  for  sinking  the  Lot- 
tery bonds  of  the  Panama  Canal,  issue  of  June  26,  1888."    *    *  * 

Art.  8.  The  contribution  of  each  member  is  limited  to  the  putting  in 
of  60  francs  per  bond,  which  will  he  furnished  at  the  dates  above  deter- 
mined.   Beyond  that  contribution  all  appeals  for  money  are  forbidden. 

In  no  case  can  the  member  he  responsible  with  regard  to  third  per- 
sons beyond  that  contribution. 

The  company's  funds  are  composed  of  the  union  of  the  sums  received 
by  the  civil  association.    *    *  * 

Art.  12.  The  rights  and  obligations  belonging  to  the  bonds  follow 
them  into  the  hands  in  which  they  may  be  found. 

Subscription  or  possession  of  a  bond  carries  ipso  facto  adhesion  to 
the  by-laws  of  the  association  and  to  the  resolutions  of  the  general 
meeting  of  the  associates.    *    *  * 

GENERAL  CONDITIONS. 

Subscribers  who  fully  pay  up  their  bonds  by  making  the  payment 
required  in  the  time  fixed  therefor — that  is  to  say.  from  the  5th  to  the 
10th  of  July,  1888,  will  have  the  right  to  a  coupon  of  7  francs  50 
centimes,  to  fall  due  the  1st  of  December,  1888. 

The  subscribers  will  have  at  all  times  after  the  payment  aforesaid 
the  right  to  anticipate  the  total  of  payments  with  conversion  of  inter- 
ests at  4  per  cent  per  year.  In  this  case  the  payment  will  be  stated 
upon  the  provisional  bond  which  they  will  preserve  up  to  the  loth  of 
December,  1889. 

From  the  16th  of  December,  1889,  the  provisional  bonds  will  be 
exchanged  for  definitive  ones,  without  conformity  of  numbers.  The 
detinitiye  bonds  will  alone  take  part  in  the  drawing  of  the  15th  of 
February,  1890. 

The  pa}Tment  of  the  prizes  will  take  place  a  month  after  each  draw- 
ing, with  deduction  of  all  amounts  remaining  due. 

The  successive  payments  on  the  provisional  bonds  will  be  received 
at  the  headquarters  of  the  company  and  at  those  of  its  correspondents 
in  France  and  abroad. 

The  payments  in  arrears  will  be  charged  with  an  interest  of  5  per 
cent  a  year. 

The  provisional  bonds  on  which  the  required  payments  shall  not  have 
been  effected  may  be  sold  at  the  Bourse  of  Paris,  without  notice  to  the 
delinquent,  a  month  after  the  becoming  due  of  the  payment,  for  the 
account  and  at  the  expense  and  risk  of  the  delinquent;  in  all  cases  they 
can  not  be  made  regular  again  except  by  payment  of  an  amount  repre- 
senting the  compound  interests  necessaiy  to  reimburse  the  capital  of 
sinking  and  that  of  the  guaranty  of  the  prizes.  In  case  of  their 
drawing  prizes,  the  holders  of  bonds  not  so  made  regular  are  depriyed 
of  the  right  to  the  amount  due  for  sinking  them  and  to  the  benefit  of 
the  prizes. 


I'A  XAMA  CANAL  TITLE. 


157 


The  definitive  bonds  shall  have  semiannual  coupons  of  7  francs  50 
centimes  falling  due  the  1st  of  June  and  the  1st  of  December,  payable 
:it  the  headquarters  of  the  company  at  Paris  and  at  those  of  its  corre- 
spondents in  France  and  abroad. 


EXHIBIT  14. 

CERTIFICATE  OF  AUGUST  21,  1902,  BY  THE  REGISTER  OF  DOCUMENTS 
AT  PANAMA,  STATING  NO  MORTGAGES  AGAINST  THE  NEW  PANAMA 
CANAL  COMPANY. 

Republic  of  Colombia. 
The  undersigned,  register  of  public  and  private  documents  of  the 
district  of  Panama,  on  the  verbal  request  of  Dr.  Lnocencio  Galindo, 
and  after  having  examined  the  books  of  registration  No.  3,  containing 
the  records  of  mortgages  for  the  period  from  1887  until  this  day, 
certilies: 

That  there  is  no  record  of  a  mortgage  affecting  the  properties  of  the 
New  Panama  Canal  Company. 
Panama,  August  21,  1902. 

(Signed)  Carlos  Barona. 

Charges  received  (decree  1209  of  1901):  Examination  of  books, 
10.85;  authentication,  $2.40;  total,  $3.25. 

(Signed)  Carlos  Barona. 


EXHIBIT  A. 

EXTRACT  FROM  TREATISE  ON  COMMERCIAL  LAW. 
By  Lyon-Caen  and  Renault. 

Third  edition,  volume  2,  sections  666-667,  A.  D.  1900. 

The  associations  in  which  the  associates  were  bound  only  to  the  extent  of  their 
contributions  and  could  transfer  their  shares  at  will  did  not  appear  in  France  under 
the  name  of  anonymous  associations;  that  name  was  reserved  for  associations  which 
the  associations  "en  participation"  of  the  present  time  represent.  The  associations 
now  in  question  were  not  regulated  either  by  the  ordinance  of  1673  or  by  any  general 
law.  The  King  alone,  by  individual  edicts,  authorized  the  creation  of  associations 
in  which  the  associates  were  bound  only  to  the  extent  of  the  total  of  their  contribu- 
tions and  in  which  the  shares  of  the  associates  were  transferable;  these  were  gener- 
ally called  companies.  Each  edict  contained  the  particular  rules  applicable  to  t  he 
association;  very  commonly  the  royal  authority  had  a  right  of  intervention  in  the 
affairs  of  the  association;  frequently,  besides,  the  edict  was  not  limited  to  authorizing 
the  creation  of  an  association.  It  conferred  a  monopoly.  This  practice  was  in  con- 
formity with  the  ideas  of  the  old  regime,  in  which  a  right  was  often  recognized 
under  the  form  of  a  privilege.  Thus  inventors,  writers,  were  only  protected  on 
condition  of  having  obtained  a  royal  privilege.  But  there  were  in  France,  even 
before  the  Revolution,  some  associations  having  shares  of  stock  {par  actions)  created 
without  the  intervention  of  the  royal  power.  Thus,  in  1750  there  was  created  the 
association  par  actions  called  the  Chamber  of  Insurance  of  Paris,  which  added  to  its 
name  the  following:  "Established  as  a  private  company  (en  corps  de  compagnie  par- 
ticulibr)  by  a  document  of  association."  *  *  *  After  the  proclamation  of  the 
liberty  of  industry  by  the  law  of  March  2,  1791,  numerous  companies  were  formed  in 
France.  *  *  *  The  convention  considered  these  associations  as  instruments  of 
speculation,  injurious  to  the  public  credit.  A  decree  of  2(3-29  Germinal,  year  2,  sup- 
pressed the  existing  companies  and  forbade  the  formation  of  any  in  the  future,  under 
any  pretext  or  any  name.  The  previous  decree  of  24th  August,  1793,  had  already 
suppressed  all  associations  the  capital  of  which  vested  upon  shares  of  stock  issued  to 
bearer  (actions  au  porteur)  on  negotiable  property  or  on  subscriptions  capable  of 
being  transferred.  But  it  permitted  the  formation  in  the  future  of  associations 
of  this  kind  with  legislative  authorization.    Following  notions  more  correct,  the 


158 


PANAMA  CANAL  TITLE. 


directory  abrogated,  two  years  later,  the  decree  of  Germinal,  year  2,  by  the  law  of 
30  Brumaire,  year  4.  This  law,  in  permitting  the  constitution  of  associations  with 
shares  of  stock,  did  not  establish  any  rule  as  to  their  formation  or  their  proceedings. 
As  a  result,  the  courts  rendered  some  extraordinary  decisions,  notably  holding  that 
the  stockholders  were  bound  personally  and  in  solido.  *  *  *  The  proposed  codd 
(of  commerce)  recognized,  by  the  side  of  the  association  under  a  collective  name  and 
the  association  en  commandite,  the  association  with  shares  of  Btock,  and  with  the 
view  of  preventing  as  much  as  possible  the  frauds  to  which  that  kind  of  association 
can  lend  itself,  the  project  of  the  code  required,  for  the  formation  of  associations  with 
shares  of  stock,  the  previous  authorization  of  the  Government  (i.e.,  of  the  executive 
administration).  *  *  *  The  courts  and  chamber  of  commence  demanded  that 
the  lawmakers  should  distinguish  two  classes  of  associations  with  shares  of  stock, 
one  class  to  be  authorized  by  the  Government,  the  other  to  be  free;  and  this  distinc- 
tion the  code  of  commerce  adopted.  It  recognized  associations  with  shares  in  which 
there  are  only  stockholders  (socittes  anonymes),  and  associations  in  which  there  are 
both  associates,  who  are  personally  responsible,  and  stockholders  ( commandite*  par 
actions).  The  former  were  subjected  to  the  authorization  of  the  Government;  the 
latter  could  be  formed  in  freedom  (art.  37  et  38,  Code  Commercial).  The  code  of 
1807  did  not  contain  any  special  restrictive  rule  either  as  to  their  constitution  or 
their  proceedings. 

Section  669  says: 

The  authorization  necessary  for  anonymous  associations  was  given  in  the  manner 
prescribed  by  regulations  of  the  public  administration — that  is  to  say,  a  decree  ren- 
dered upon  the  advice  of  the  council  of  state  (art.  37,  Code  Commercial).  The  lat- 
ter received  the  project  of  the  by-laws  of  the  future  company,  and  could  advise  that 
they  should  be  approved  and  the  association  authorized,  or  not  to  authorize  it  until 
after  modification  of  the  by-laws,  or  to  refuse  the  authorization  altogether. 

The  Government  (the  executive  administration)  was  not  required  to  give  any  rea- 
son for  its  decision.  *  *  *  The  code  not  containing  more  than  some  very  sum- 
mary rules  concerning  the  legal  character  of  anonymous  associations,  concerning  the 
form  (art.  40)  of  authenticating  the  document  constituting  the  association,  and  con- 
cerning the  publicity  to  be  given  to  the  document  (art.  45),  the  Government  (execu- 
tive administration )  had  full  liberty  to  require  or  not  the  insertion  in  the  by-laws 
of  clauses  which  seemed  good  to  it,  taking  into  account  the  amount  of  the  capi- 
tal, the  nature  of  the  operation  contemplated,  and  all  other  circumstances,  which 
were  left  to  its  consideration  and  disposition.  (The  author  adds  this  note:  "This 
merits  remark,  because  in  several  countries  in  which  previous  authorization  was 
required  for  anonymous  associations  and  for  the  associations  of  commandite  par 
action  the  laws  contained  in  themselves  numerous  restrictive  rules  to  which  all  these 
associations  were  bound  to  submit.")  As  a  matter  of  fact,  however,  the  council  of 
state  adopted  a  system  of  rules  (jurisprudence),  in  the  light  of  which  it  required  or 
rejected  always,  or  nearly  always,  certain  clauses  of  the  by-laws.  The  administra- 
tion could  retract  the  authorization  it  had  given,  which  it  commonly  did  when  an 
association  violated  its  by-laws.  For  certain  associations  the  administration  named 
supervisors  charged  with  the  duty  of  overseeing  their  proceedings.  The  authoriza- 
tion necessary  for  creating  the  association  was  likewise  required  for  all  modifications 
afterwards  made  in  the  by-laws. 


EXHIBIT  B. 

SPECIAL  ACT  OF  JULY  1,  1893  (FRANCE),  RELATIVE  TO  THE  LIQUIDA- 
TION OF  THE  OLD  PANAMA  CANAL  COMPANY. 

An  Act  Relative  to  the  Liquidation  of  the  Universal  Company  of  the 
Panama  Interoceanic  Canal. 

The  Senate  and  the  Chamber  of  Deputies  have  adopted  and  enacted, 
and  the  President  of  the  Republic  promulgates,  the  following  law: 

Art.  1.  From  the  date  of  the  promulgation  of  the  present  law,  all 
actions  now  in  course  of  procedure  that  have  been  brought  by  holders 
of  bonds  issued  by  the  Universal  Company  of  the  Panama  Inter- 
oceanic Canal,  or  that  have  been  brought  by  any  creditors  of  the  said 
Company,  whether  against  the  liquidator  in  his  official  capacity,  or 
against  the  Administrators  to  enforce  their  responsibility,  or  against 


PANAMA  CANAL  TITLE. 


159 


third  parties  for  restitution,  or  arising  in  any  other  manner  whatsoever, 
are  hereby  declared  suspended.  The  plaintiff  may  follow  upandprose- 
eute  said  actions  only  by  complying  with  the  requirements  of  articles 
2  and  3  hereof. 

All  proceedings  concerning  attachments  and  execution,  even  those 
now  in  course  of  enforcement  and  procedure,  against  the  personal  or 
real  property  of  the  said  company,  are  likewise  suspended. 

I. 

BOND  OR  OBLIGATION  HOLDERS'  ATTORN  EY. 

Art.  2.  All  rights  of  action,  of  any  character  whatever,  accruing  to 
owners  of  bonds  emitted  by  the  Universal  Company  of  the  Panama 
Interoceanic  Canal,  whether  against  the  Liquidator  in  his  official  capacity, 
or  against  the  administrators  to  enforce  their  responsibility,  or  for  a 
right  to  restitution  arising  from  any  other  cause,  shall  be  enforced  and 
sued  on  by  an  attorney  or  mandataire  appointed  for  the  purpose,  on 
request  of  the  Attorney  of  the  Republic  for  the  jurisdiction  of  the 
Civil  Tribunal  of  the  Seine,  by  a  decree  in  Chambers. 

In  case  there  should  arise  a  divergence  or  opposition  of  interests 
between  the  different  classes  of  bondholders,  one  or  more  special 
mandataires  may  be  appointed  in  the  manner  and  form  just  above  pro- 
vided. The  powers  of  the  mandataires  maybe  revoked  a1  the  same 
request  and  in  the  same  manner.  There  shall  be  no  appeal  from  or 
recourse  against  said  orders  or  decrees. 

However,  any  bondholder  shall  have  the  right  to  enter  an  action  for 
damages  in  connection  with  a  criminal  matter,  or  to  intervene  in  pro- 
ceedings instituted  by  the  attorney  or  mandataire  aforesaid,  at  his  own 
expense  and  cost,  without  in  any  way  delaying  the  proceedings  or 
judgment. 

Moreover,  every  bondholder  shall  have  the  power  to  bring  any 
action,  in  his  individual  right  and  at  his  own  risk  and  peril,  which 
the  attorney  shall  have  refused  or  failed  to  enter  within  one  month 
after  he  shall  have  been  notified  and  requested  to  enter  the  same. 

Suits  brought  by  the  attorneys  or  mandataires  shall  not  block  the 
right  of  action  on  the  part  of  the  Company,  belonging  to  the  liquidator. 
The  attorneys  shall  have  power  to  call  on  the  liquidator  for  communi- 
cation of  all  documents  tending  to  shed  light  on  the  facts;  their  legal 
residence  shall  be  the  jurisdiction  within  which  shall  be  carried  on  the 
winding  up  or  liquidation  of  the  company's  affairs;  the  tax  costs  arising 
from  the  exercise  of  their  official  duties  shall  be  defrayed  from  the 
credits  of  the  liquidation,  so  far  as  this  may  be  done  without  impairing 
the  reimbursement  to  the  latter  of  the  sums  which  it  shall  have  advanced. 

Art.  3.  All  actions  emanating  from  the  liquidator,  or  from  the  attor- 
neys, or  from  interested  parties  individually,  shall  be  brought  before 
the  Civil  Tribunal  of  the  Seine.  Such  proceedings  as  may  arise  from  the 
distribution  of  the  assets  shall  be  brought  likewise  before  this  tribunal. 
Suits  instituted  by  parties  intervening  in  damages  shall  remain  in  the 
jurisdiction  where  already  the  prosecution  has  been  inaugurated. 

Art.  4.  The  mandataire  shall  have  of  right  the  "  judicial  assistance 
privilege  "  in  the  carrying  on  of  actions  and  in  the  executing  of  deci- 
sions which  he  shall  have  obtained.  Likewise  he  shall  enjoy  the  same 
in  all  interventions  asking  for  damages,  and  in  the  case  of  all  record- 
ing-taxes which  might  be  otherwise  exacted.  On  his  request,  pre- 
sented to  the  Attorney  of  the  Republic,  advocates  and  bailiffs  shall  be 


160 


PANAMA  CANAL  TITLE. 


appointed,  in  the  manner  and  form  prescribed  by  article  \?>  of  the 
law  dated  January  22nd,  1851. 

However,  the  "  judicial  assistance  privilege"  shall  not  extend  to 
costs  of  transportation  for  judges,  for  Government  officials  or  for 
experts,  nor  to  the  latter's  fees,  nor  to  witness  fees.  As  to  stamp 
duties,  costs  of  recording  and  court  costs  in  general,  the  Treasury 
shall  exact  them  from  the  debtor  only,  after  the  payment  of  such 
judgment  as  shall  have  been  obtained  by  the  mandataire. 

Art.  5.  The  mandataire  shall  have  power  tocompromise  or  to  desist 
from  an  action,  though  he  may  do  so  only  after  consulting  with  three 
jurists  appointed  by  the  Attorney  of  the  Republic;  and  all  compro- 
mises or  withdrawals  of  actions  shall  have  to  be  ratified  and  approved 
by  judicial  decree  rendered  in  Chambers. 

lie  alone  shall  have  power  to  lev}T  execution  on  judgments  pro- 
nounced by  the  Court,  or  to  receive  the  sums  obtained  on  compromise, 
whether  such  compromise  have  been  obtained  on  his  own  demand  or 
on  that  of  obligation  holders  acting  in  an  individual  capacity;  all  sums 
thus  received  shall  be  deposited  by  him  at  the  bureau  of  deposits 
and  consignments,  and  the  liquidator  shall  give  him  due  quittance 
therefor. 

n. 

THE  LIQUIDATOR. 

Art.  6.  Before  proceeding  at  all  to  distribute  the  assets  of  the 
company,  the  liquidator  shall  publish  in  the  "Journal  Officiel"  and  in 
the  "Journal  Officiel  (Commune  edition)"  a  notice,  calling  on  all  par- 
ties interested  to  produce  their  claims  against  the  company  and  their 
proofs  thereof,  within  the  space  of  six  months,  under  pain  of  becom- 
ing barred  from  bringing  any  action  on  the  said  claim.-. 

The  production  of  the  claims  and  the  transmission  of  proofs  in  sup- 
port thereof  may  be  made  b}T  simple  registered  letter. 

Art.  7.  The  liquidator  shall  proceed  to  verify  and  to  admit  said 
claims  in  the  manner  and  form  prescribed  by  articles  495  and  497, 
first  paragraph,  of  the  Code  of  Commerce. 

Art.  8.  Should  the  claim  be  contested,  notice  of  this  fact  shall  be 
sent  by  registered  mail  to  the  claimant  in  question,  and  the  latter  shall 
have  a  term  of  three  months  within  which  he  must  institute  proceed- 
ings before  the  Civil  Tribunal  of  the  Seine,  in  order  to  have  his  claim 
adjudicated. 

Judgment  must  oe  pronounced  thereon  within  the  space  of  one 
month,  as  in  the  case  of  matters  demanding  immediate  and  summary 
adjudication.  An  appeal  from  such  decision  must  be  entered  within 
ten  days  from  the  notification  of  said  judgment  either  to  the  party  in 
person  or  at  his  domicile. 

Art.  9.  The  distribution  of  all  dividends  arising  from  an  action 
brought  by  the  company  or  from  actions  brought  by  the  attorney  or 
mandataire  of  bondholders,  or  from  any  other  source  whatever,  shall 
be  made  by  the  liquidator,  who  alone  shall  have  competency  to  receive 
opposition  or  objections  to  the  same. 

Art.  10.  All  acts  tending  to  alienate  the  assets  of  the  company,  all 
contracts  entailing  a  transfer  or  contribution  of  the  whole  or  of  a  part 
of  the  assets  of  the  concern,  emanating  from  the  liquidator  of  the 
Universal  Company  of  the  Panama  Interoceanic  Canal,  shall  be  subject 


PANAMA  CANAL  TITLE. 


K>1 


to  the  approval  of  the  Civil  Tribunal  of  the  Seine,  which  shall,  on  tbe 
report  of  one  of  the  Justices,  pass  on  the  question  in  open  ( lourt. 

Art.  11.  All  decrees  of  approval  rendered  in  accordance  with  the 
preceding  article  shall  be  published,  within  a  term  of  ten  days,  in  the 
'•Journal  Officiol"'  and  in  the  ••Journal  Officiel  (Commune  edition)". 

This  decree  may  be  attacked  by  the  shareholders,  by  the  mandataire 
of  the  bondholders,  and  By  the  other  creditors  of  the  company,  within 
a  delay  not  exceeding  one  month  from  the  date  of  the  publication 
aforesaid.  The  Civil  Tribunal  shall  adjudicate  the  question  within 
the  space  of  one  month,  as  in  the  case  of  matters  demanding  an 
immediate  and  summary  adjudication.  The  appeal  from  such  decision 
must  be  entered  within  ten  days  from  the  time  of  notification  of  said 
judgment  to  the  party  in  person  or  at  his  domicile. 

Art.  12.  The  Universal  Company  of  the  Panama  Interoceanic  Canal, 
tlu1  civil  company  formed  for  the  purpose  of  redeeming  the  obligations 
or  bonds  of  the  Panama  Canal  (issue  of  March,  1888),  and  the  civil  or 
non-trading  company  for  the  redemption  of  the  lottery  bonds  of  the 
Panama  Canal,  are  hereby  exempted  from  the  payment  of  all  stamp 
duties,  and  of  all  transfer  or  transmission  taxes  now  due  or  to  become 
due  on  any  shares  or  bonds  of  the  -aid  companies. 

Art.  13.  Beginning  with  the  date  of  the  promulgation  of  the  present 
law,  no  limitation  in  bar  of  actions  in  damages  shall  begin  to  run  against 
the  creditors  of  the  Panama  Canal  Universal  Company,  until  the  com- 
plete distribution  of  the  assets  realized. 

Art.  11.  Shareholders,  subscribers  or  buyers  of  stock  having 
acquired  title  to  the  same  before  the  company  was  placed  into  the 
hands  of  a  liquidator,  provided  they  represent  at  least  one-twentieth  of 
the  capital  stock,  may  join  a  common  interest  and  entrust  one  or  more 
attorneys  or  mandataires  with  maintaining  any  action  and  with  repre- 
senting them  in  Court. 

The  present  law,  deliberated  upon  and  adopted  by  the  Senate  and 
Chamber  of  Deputies,  shall  be  enforced  as  a  law  of  the  State. 

Done  at  Marly-le-Roi,  on  the  1st  day  of  July,  1893. 

Carnot. 

By  the  President  of  the  Republic: 

The  Keeper  of  the  Seals,  the  Minister  of  Justice,  E.  Guerin. 
The  Minister  of  Finance,  P.  Peytral. 


EXHIBIT  C. 
CONCESSION  OF  1878  AND  EXTENSIONS. 

WYSE  CONCESSION,  MARCH  20,  1878. 
[Diario  Oficial  of  Bogota,  Wednesday,  May  22,  1878.] 

CONTRACT  FOR  THE  CONSTRUCTION  OF  AN  INTEROCEANIC  CANAL  ACROSS 
COLOMBIAN  TERRITORY. 

Eustorgio  Salgar,  secretary  of  the  interior  and  of  foreign  relations 
of  the  United  States  of  Colombia,  duly  authorized,  of  the  one  part, 
and  of  the  other  part  Lucien  N.  B.  Wyse,  chief  of  the  Isthmus  Scien- 
tific Surveying  Expedition  in  1876,  1877,  and  1878,  member  and  dele- 
gate of  the  council  of  administration  of  the  International  Interoceanic 


8751—02  11 


PANAMA  CANAL  TITLE. 


Canal  Association,  presided  by  General  tttienne  Tiirr,  in  conformity 
with  powers  bestowed  at  Paris,  from  the  ^7th  to  the  29th  of  October, 
1877,  which  he  has  exhibited  in  legal  form,  have  celebrated  the  follow- 
ing contract: 

Article  1.  The  Government  of  the  United  States  of  Colombia 
grants  to  Mr.  Lucien  N.  B.  Wyse,  who  accepts  it  in  the  name  of  the 
International  Interoceanic  Canal  Association,  represented  by  their  coun- 
cil of  administration,  the  exclusive  privilege  for  the  const  ruction  across 
its  territory,  and  for  the  operating  of  a  canal  between  the  Atlantic  and 
Pacific  oceans.  Said  canal  may  be  constructed  without  restrictive 
stipulations  of  any  kind. 

This  concession  is  made  under  the  following  conditions: 

1st.  The  duration  of  the  privilege  shall  be  for  ninety-nine  years  from 
the  day  on  which  the  canal  shall  be  wholly  or  partially  opened  to  the  use 
of  the  public,  or  when  the  grantees  or  their  representatives  commence 
to  collect  the  dues  on  transit  and  navigation. 

^<1.  From  the  date  of  approbation  by  the  Colombia  Congress  of  the 
present  contract  for  the  opening  of  the  interoceanic  canal,  the  Govern- 
ment of  the  Republic  can  not  concede  to  any  company  or  individual, 
under  any  consideration  whatever,  the  right  to  construct  another  canal 
across  Colombian  territory  which  shall  connect  the  two  oceans,  nor 
construct  one  itself.  Should  the  grantees  wish  to  construct  a  railroad 
as  an  auxiliary  to  the  canal,  the  Government  (with  the  exception  of 
existing  rights)  cannot  grant  to  any  other  company  or  individual  the 
right  to  build  another  interoceanic  railroad,  nor  do  so  itself,  during 
the  time  allowed  for  the  construction  and  use  of  the  canal. 

3d.  The  necessary  studies  of  the  ground  and  the  route  for  the  line 
of  the  canal  shall  be  made  at  the  expense  of  the  grantees  by  an  inter- 
national commission  of  individuals  and  competent  engineers,  in  which 
two  Colombian  engineers  shall  take  part.  The  commission  shall  deter- 
mine the  general  route  of  the  canal  and  report  to  the  Colombian  Gov- 
ernment directly,  or  to  its  diplomatic  agents  in  the  United  States  or 
Europe,  upon  the  results  obtained,  at  the  latest  in  1881,  unless  unavoid- 
able circumstances  clearly  proven  should  rn*event  their  so  doing.  The 
report  shall  comprise  in  duplicate  the  scientific  labors  performed  and 
an  estimate  of  the  projected  work. 

4th.  The  grantees  shall  then  have  a  period  of  two  years  to  organize 
a  universal  anonymous  company,  which  shall  take  charge  of  the  enter- 
prise and  of  the  construction  of  the  canal.  This  term  shall  commence 
from  the  date  mentioned  in  the  preceding  paragraph. 

5th.  The  canal  shall  be  finished  and  placed  at  the  service  of  the  public 
within  the  subsequent  twTelve  }-ears  after  the  formation  of  the  company 
which  will  undertake  its  construction,  but  the  executive  power  is 
authorized  to  grant  a  further  maximum  term  of  six  years  in  the  case 
of  encountering  vis  major,  and  if  after  one-third  of  the  canal  is  built, 
the  company  should  find  it  impossible  to  conclude  the  work  in  the  said 
twelve  years. 

6th.  The  canal  shall  have  the  width,  depth,  and  all  other  conditions 
requisite  in  order  that  sailing  vessels  and  steamships  measuring  up  to 
140  meters  long,  16  meters  in  width,  and  8  meters  in  draught  shall, 
with  lowered  topmast,  be  able  to  pass  the  canal. 

7th.  All  public  lands  which  may  be  required  for  the  route  of  the 
canal,  the  ports,  stations,  wharves,  moorings,  warehouses,  and  in  gen- 
eral for  the  construction  and  service  of  the  canal,  as  well  as  for  the 


PANAMA   CANAL  TITLE. 


railway,  should  it  be  convenient  to  build  it,  shall  be  ceded  gratis  to 
the  grantees. 

8th.  These  lands  shall  revert  to  the  Government  of  the  Republic, 
with  the  railroad  and  canal,  at  the  termination  of  this  privilege;  there 
is  also  granted  for  the  use  of  the  canal  a  belt  of  land  two  hundred 
meters  wide  on  each  side  of  its  hanks  throughout  all  the  distance  which 
it  may  run.  hut  the  owners  of  lands  on  its  banks  shall  have  free  access 
to  the  canal  and  its  ports  as  well  as  to  the  right  of  use  of  any  roads 
which  the  grantees  muy  open  there;  and  this  without  paying  any  dues 
to  the  company. 

9th.  If  the  lands  through  which  the  canal  shall  pass,  or  upon  which 
the  railroad  may  be  built,  should,  in  whole  or  in  part,  be  private  prop- 
erty, the  grantees  shall  have  the  right  to  demand  their  expropriation 
by  the  Government  according  to  all  the  legal  formalities  in  such  cases. 
The  indemnity  which  shall  be  made  to  the  landowners,  and  which  shall 
be  based  on  their  actual  value,  shall  beat  the  expense  of  the  company. 
The  grantees  shall  enjoy  in  this  case,  and  in  those  of  temporary  occu- 
pation of  private  property,  all  the  rights  and  privileges  which  the 
law  allows  to  the  nation. 

10th.  The  grantees  may  establish  and  operate  at  their  cost  the  tele- 
graph lines  which  they  may  consider  useful  as  auxiliaries  in  the  build- 
ing and  management  of  the  canal. 

11th.  It  is,  however,  stipulated  and  agreed  that  if,  before  the  pay- 
ment of  the  security  determined  upon  in  article  2,  the  Colombian 
Government  should  receive  any  formal  proposal,  sufficiently  guaran- 
teed, in  the  opinion  of  the  said  Government,  to  construct  the  canal  in 
less  time  and  under  more  advantageous  conditions  for  the  United  States 
of  Colombia,  said  proposal  shall  be  communicated  to  the  grantees  or 
their  representatives,  that  they  may  be  substituted  therein,  in  which 
case  they  shall  be  preferred;  but  if  they  do  not  accept  such  substitu- 
tion, the  Colombian  Government,  in  the  new  contract  which  they  may 
celebrate,  shall  exact,  besides  the  guarantee  mentioned  in  article  2, 
the  sum  of  three  hundred  thousand  dollars  in  coin,  which  shall  be 
given  as  indemnity  to  the  grantees. 

Art.  2.  Within  the  term  of  twelve  months  from  the  date  at  which 
the  international  commission  shall  have  presented  the  definite  results 
of  their  studies,  the  grantees  shall  deposit  in  the  bank  or  banks  of 
London,  to  be  designated  by  the  national  executive  power,  the  sum 
of  seven  hundred  and  fifty  thousand  francs,  to  the  exclusion  of  all 
paper  money,  as  security  for  the  execution  of  the  work.  The  receipt 
of  said  banks  shall  be  a  voucher  for  the  fulfillment  of  said  deposit. 
It  is  understood  that  if  the  grantees  should  lose  that  deposit  by  virtue 
of  the  stipulations  contained  in  clauses  2  and  3  of  article  22  of  the 
present  contract,  the  sum  referred  to,  with  interest,  shall  become  in 
toto  the  property  of  the  Colombian  Government.  After  the  comple- 
tion of  the  canal,  said  sum,  without  interest,  which  latter  will  in  this 
case  belong  to  grantees,  shall  be  paid  into  the  treasury,  for  the 
expenses  which  may  have  been  incurred  or  may  be  incurred  for  the 
construction  of  buildings  for  the  public  services. 

Art.  3.  If  the  line  of  the  canal  to  be  constructed  from  sea  to  sea 
should  pass  to  the  west  and  to  the  north  of  the  imaginary  straight 
line  which  joins  Cape  Tiburon  with  Garachine  Point,  the  grantees 
must  enter  into  some  amicable  arrangement  with  the  Panama  Railroad 
Company,  or  pay  an  indemnity,  which  shall  be  established  in  accord- 


PANAMA   CAN  A  I,  TITLE. 


ance  with  the  provisions  of  law  46,  of  August  L6,  L867,  ""approving 
the  contract  celebrated  on  duly  5,  1867,  reformatory  of  the  contract 
of  April  15,  1850,  for  the  construction  of  a  railroad  from  one  ocean 
to  the  other  through  the  Isthmus  of  Panama." 

In  case  the  international  commission  should  choose  the  Atrato  or 
some  other  stream  already  navigable  as  one  of  the  ends  of  the  canal, 
the  ingress  and  egress  by  such  stream,  and  the  navigation  of  its  waters, 
so  long  as  it  is  not  intended  to  pass  through  the  canal,  shall  be  open  to 
commerce  and  free  from  all  imposts. 

Art.  4.  Besides  the  lands  granted  in  paragraphs  7  and  8  of  article  1 
there  shall  he  awarded  to  the  grantees,  as  an  aid  for  the  accomplish- 
ment of  the  work,  live  hundred  thousand  hectare-  of  public  lands, 
with  the  mines  they  may  comprise,  in  the  localities  which  the  company 
may  select.  This  award  shall  he  made  directly  by  the  national  execu- 
tive power.  The  public  lands  situated  on  the  seacoast,  on  the  borders 
of  the  canal  or  of  the  rivers,  shall  he  divided  in  alternate  lots  between 
the  Government  and  the  company,  forming  areas  of  from  one  to  two 
thousand  hectares.  The  measurements  for  the  allotment  or  locating 
shall  he  made  at  the  expense  of  the  grantees  and  with  the  intervention 
of  Government  commissioners.  The  public  lands  thus  granted,  with 
the  mines  they  may  hold,  shall  he  awarded  to  the  grantees  as  fast  as 
the  work  of  construction  of  the  canal  progresses,  and  in  accordance 
with  rules  to  he  laid  down  by  the  executive  power. 

Within  a  belt  of  two  myriameters  on  each  side  of  the  canal,  and 
during  five  years  after  the  termination  of  the  work,  the  Government 
shall  not  have  the  right  to  grant  other  lands  except  the  said  lots  until 
t  he  company  shall  have  called  for  the  whole  number  of  lots  granted  by 
this  article. 

Art.  5.  The  Government  of  the  Republic  hereby  declares  the  ports 
at  each  end  of  the  canal,  and  the  waters  of  the  latter  from  sea  to  sea, 
to  be  neutral  at  all  times;  and  consequently  in  case  of  war  among  other 
nations,  the  transit  through  the  canal  shall  not  be  interrupted  by  such 
event,  and  the  merchant  vessels  and  individuals  of  all  nations  of  the 
world  may  enter  into  said  ports  and  travel  on  the  canal  without  being 
molested  or  detained.  In  general, any  vessel  may  pass  freely  withoutany 
discrimination,  exclusion,  or  preference  of  nationalities  or  persons  on 
payment  of  the  dues  and  the  observance  of  the  rules  established  by  the 
company  for  the  use  of  the  canal  and  its  dependencies.  Exception  is  to 
be  made  of  foreign  troops,  which  shall  not  have  the  right  to  pass  without 
permission  from  Congress,  and  of  the  vessels  of  nations  which,  being 
at  war  with  the  United  States  of  Colombia,  may  not  have  obtained  the 
right  to  pass  through  the  canal  at  all  times,  by  public  treaties  wherein 
are  guaranteed  the  sovereignty  of  Colombia  over  the  Isthmus  of  Panama 
and  over  the  territory  whereon  the  canal  is  to  be  cut,  and  the  immunity 
and  neutrality  of  the  said  canal,  its  ports,  ba}^s,  and  dependencies  and  the 
adjacent  seas. 

Art.  6.  The  United  States  of  Colombia  reserve  to  themselves  the 
right  to  pass  their  war  vessels,  troops,  and  munitions  of  war  at  all  times 
and  without  pa}Ting  any  dues  whatever.  The  passage  of  the  canal  is 
strictly  (dosed  to  w  ar  vessels  of  nations  in  a  state  of  open  hostility  with 
one  or  more  other  nations,  and  which  may  not  have  acquired,  by  pub- 
lic treaty^  with  the  Colombian  Government,  the  right  to  pass  through 
the  canal  at  all  times. 

Art.  7.  The  grantees  will  enjoy  the  right  during  the  whole  time  of 


PANAMA  CANAL  TITLE. 


165 


the  privilege  to  use  the  ports  at  the  termini  of  the  canal,  as  well  as 
intermediate  parts,  for  the  anchorage  arid  repair  of  ships,  and  the 
loading1,  depositing,  transshipping,  or  landing  of  merchandise.  The 
ports  of  the  canal  shall  be  open  and  free  to  the  commerce  of  all  nations, 
and  no  import  duties  shall  be  exacted,  except  on  merchandise  destined 
to  be  introduced  for  the  consumption  of  the  rest  of  the  Republic.  The 
said  ports  shall,  therefore,  be  open  to  importations  from  the  commence- 
ment of  the  work,  and  the  custom-houses,  and  the  revenue  service 
which  the  Government  may  deem  convenient  for  the  collection  of  duties 
on  merchandise  destined  foi  other  parts  of  the  Republic,  shall  be 
established,  in  order  to  prevent  introduction  of  smuggled  goods. 

Art.  S.  The  executive  power  shall  dictate,  for  the  protection  of  the 
financial  interests  of  the  Republic,  the  regulations  conducive  to  the  pre- 
vention of  smuggling,  and  shall  have  the  power  to  station,  at  the  cost 
of  the  nation,  the  number  of  men  which  they  may  deem  necessary  for 
that  service. 

Out  of  the  indispensable  officials  for  that  service,  ten  shall  be  paid 
by  the  company,  and  their  salaries  shall  not  exceed  those  enjoyed  by 
employes  of  the  same  rank  in  the  Barranquilla  custom-house. 

The  company  shall  cany  gratis  through  the  canal,  or  on  the  auxiliary 
railway,  the  men  destined  for  the  service  of  the  nation,  for  the  service 
of  the  state  through  whose  territory  the  canal  and  railroad  may  pass,  or 
for  the  service  of  the  police,  with  the  object  of  guarding  against  foreign 
enemies,  or  for  the  preservation  of  public  order,  and  shall  also  trans- 
port gratis  the  baggage  of  such  men,  their  war  materials,  armament, 
and  clothing  which  they  may  need  for  the  service  assigned  to  them. 

If  the  company  has  not  ships  or  tugboats  it  will  pay  the  passage  of 
these  same  men  across  the  Isthmus  with  their  baggage,  munitions, 
arms  and  equipment. 

The  subsistence  of  the  public  force  which  may  be  deemed  necessary 
for  the  safety  of  the  interoceanic  transit  shall  likewise  be  at  the  expense 
of  the  company. 

Art.  9.  The  grantee  shall  have  the  right  to  introduce,  free  of  import 
or  other  duties  of  whatever  class,  all  the  instruments,  machinery,  tools, 
fixtures,  provisions,  clothing  for  laborers  which  they  may  need  during 
all  the  time  allowed  to  them  for  the  construction  and  use  of  the  canal. 
The  ships  carrying  cargoes  for  the  use  of  the  enterprise  shall  enjoy 
free  entry  at  whatever  point  shall  afford  them  easy  access  to  the 
line  of  the  canal. 

Art.  10.  No  taxes,  either  national,  municipal,  of  the  State,  or  of  any 
other  class,  shall  be  levied  upon  the  canal,  the  ships  that  navigate  it, 
the  tugs  and  vessels  at  the  service  of  the  grantees,  their  warehouses, 
workshops,  and  offices,  factories  of  whatever  class,  storehouses, 
wharves,  machinery  or  other  works  or  property  of  whatever  character 
belonging  to  them,  and  which  they  may  need  for  the  service  of  the 
canal  and  its  dependencies,  during  the  time  conceded  for  its  construc- 
tion and  operation.  The  grantees  shall  also  have  the  right  to  take 
from  the  public  lands  the  materials  of  any  kind  which  they  may 
require  without  paying  any  compensation  for  the  same. 

Art.  11.  The  passengers,  money,  precious  metals,  merchandise,  and 
articles  and  effects  of  all  kinds  which  ma}7  be  transported  over  the 
canal  shall  also  be  exempt  from  all  duties — national,  municipal,  transit, 
and  others.  The  same  exemption  is  extended  to  all  articles  and 
merchandise  which  ma}T  be  deposited,  on  conditions  to  be  stipulated 


!<><> 


PANAMA   CANAL  TITLE. 


with  the  company,  in  the  storehouses  and  stations  belonging  to  them 
in  the  case  of  interior  or  exterior  commerce. 

Art.  12.  Ships  desiring  to  pass  through  the  canal  shall  presentatthe 
port  of  the  terminus  of  the  canal  at  which  they  may  arrive  their  respec- 
tive registers  and  other  sailing  papers  prescribed  bytnelawsand  public 
treaties,  so  that  the  vessels  may  navigate  without  interruption.  Ves- 
sels not  having  said  papers,  or  which  should  refuse  to  present  them, 
may  be  detained  and  proceeded  against  according  to  law. 

Art.  13.  The  Government  allows  the  immigration  and  free  access 
to  the  lands  and  plants  of  the  grantees  of  all  the  employes  and  work- 
ingmen  of  whatever  nationality,  who  may  be  contracted  for  the  work 
or  who  may  come  to  engage  themselves  to  work  on  the  canal,  on  con- 
dition that  such  employes  or  laborers  shall  submit  to  the  existing 
laws  and  to  the  regulations  established  by  the  company.  The  Gov- 
ernment promises  them  support  and  protection,  and  the  enjoyment  of 
their  rights  and  guarantees,  in  conformity  with  the  national  constitution 
and  laws,  during  the  time  they  may  sojurn  on  Colombian  territory. 

The  Colombian  manual  laborers  and  other  workmen  employed  on 
the  work  of  the  canal  shall  be  exempt  from  all  requisitions  and  mili- 
tary service,  national  as  well  as  of  the  state. 

Art.  14.  In  order  to  indemnify  the  grantees  of  the  construction, 
maintenance,  and  working  expenses  incurred  by  them,  they  shall  have, 
during  the  whole  period  of  the  privilege,  the  exclusive  right  to  estab- 
lish and  collect  for  the  passage  of  the  canal  and  its  ports  the  dues  for 
light-houses,  anchorage,  transit,  navigation,  repairs,  pilotage,  towage, 
hauling,  storage,  and  of  moorage  accordingto  the  tariff  which  they  may 
issue,  and  which  they  may  modify  : 1 1  any  time  under  the  following 
express  conditions: 

1st.  They  shall  collect  these  dues,  without  any  exceptional  favor, 
from  all  vessels  in  like  circumstances. 

2d.  The  tariffs  shall  )>e  published  four  months  before  their  enforce- 
ment in  the  Diario Oticial  of  the  Government,  as  well  as  in  the  capitals 
and  the  principal  commercial  ports  of  the  countries  interested. 

3d.  The  principal  navigation  dues  to  be  collected  shall  not  exceed 
the  sum  of  ten  francs  for  each  cubic  meter  resulting  from  the  multi- 
plication of  the  principal  dimensions  of  the  immerged  hull  of  the  ship 
in  transit  (length,  breadth,  and  draught). 

4th.  The  principal  dimensions  of  the  ship  in  transit,  that  is  to  say, 
the  maximum  exterior  length  and  breadth  at  the  water  line,  as  well  as 
the  greatest  draught,  shall  be  the  metrical  dimension  inserted  in  the 
official  permits  of  navigation,  excepting  any  modifications  supervening 
during  the  voyage.  The  ship's  captains  and  the  company's  agents  may 
demand  a  new  measurement,  which  operations  shall  be  carried  out  at 
the  expense  of  the  petitioner;  and, 

5th.  The  same  measurement,  that  is  to  say,  the  number  of  cubic  meters 
contained  in  the  parallelopipedon  circumscribing  the  immerged  hull 
of  the  ship,  shall  serve  as  a  basis  for  the  determination  of  the  other 
accessory  dues. 

Art.  15.  By  way  of  compensation  for  the  rights  and  exemptions 
which  are  allowed  to  the  grantees  in  this  contract,  the  Government 
of  the  Republic  shall  be  entitled  to  a  share  amounting  to  five  per  cent 
of  the  gross  receipts  obtained  by  the  enterprise,  by  virtue  of  the  rights 
established  or  which  will  be  established  in  conformity  with  article  14, 
during  the  first  twent}T-live  years  after  the  opening  of  the  canal  to  the 


PANAMA   CANAL  TITLE. 


lf>7 


use  of  the  public.  From  the  twenty-sixth  up  to  the  fiftieth  year,  inclu- 
sive, it  shall  be  entitled  to  a  share  ot  six  percent;  from  the  fifty-first  to 
the  se\  enty-lit'th  to  seven  per  cent;  and  from  the  seventy-sixth  to  the 
termination  of  the  privilege  to  eight  per  cent.  It  is  understood  that 
these  shares  shall  he  reckoned,  as  has  been  said,  on  the  gross  income 
from  all  sources,  without  any  deduction  whatever  for  expenses,  interest 
on  shares,  or  on  loans  or  debts  against  the  company.  The  ( rovernment 
of  the  Republic  shall  have  the  right  to  appoint  a  commissioner  or 
agent,  who  shall  intervene  in  the  collections  and  examine  the  accounts, 
and  the  distribution  or  payment  of  the  shares  coming  to  the  Govern- 
ment shall  be  made  in  due  half-yearly  installments.  The  product  of 
the  five,  six,  seven,  and  eight  per  cent  shall  he  distributed  as  follows: 

Four-fifths  of  it  shall  go  to  the  Government  of  the  Republic  and  the 
remaining  one-fifth  to  the  government  of  the  State  through  whose 
territory  the  canal  may  pass. 

The  company  guarantees  to  the  Government  of  Colombia  that  the 
share  of  the  latter  shall  in  no  case  be  less  than  the  sum  of  two  hundred 
and  lift}'  thousand  dollars  a  year,  which  is  the  same  as  that  received 
as  its  share  in  the  earnings  of  the  Panama  Railroad,  so  that  if  in  any 
year  the  five,  six,  seven,  or  eight  per  cent  should  not  reach  said  sum, 
it  shall  be  completed  out  of  the  common  funds  of  the  company. 

Art.  16.  The  grantees  are  authorized  to  require  payment  in  advance 
of  any  charges  which  they  may  establish;  nine-tenths  of  these  charges 
shall  be  made  payable  in  gold,  and  only  the  remaining  one-tenth  part 
shall  be  payable  in  silver  of  twenty-five  grammes,  of  a  fineness  of  900  m. 

Art.  17.  The  ships  which  shall  infringe  upon  the  rules  established 
by  the  company  shall  be  subject  to  the  payment  of  a  line  which  said 
company  shall  fix  in  its  regulations,  of  which  due  notice  shall  be  given 
to  the  public  at  the  time  of  the  issue  of  the  tariff.  Should  they  refuse 
to  pay  said  fine,  nor  furnish  sufficient  security,  they  may  be  detained 
and  prosecuted  according  to  the  laws.  The  same  proceedings  may  be 
observed  for  the  damages  they  may  have  caused. 

Art.  18.  If  the  opening  of  the  canal  shall  be  deemed  financially  pos- 
sible, the  grantees  are  authorized  to  form,  under  the  immediate  pro- 
tection of  the  Colombian  Government,  a  universal  joint  stock  company, 
which  shall  undertake  the  execution  of  the  work,  taking  charge  of  all 
financial  transactions  which  may  be  needed.  As  this  enterprise  is 
essentially  international,  and  for  public  utility,  it  is  understood  that  it 
shall  always  be  kept  free  from  political  influences. 

The  company  shall  take  the  name  of  '"The  Universal  Interoceanic 
Canal  Association;"  its  residence  shall  be  fixed  in  Bogota,  New  York, 
London,  or  Paris,  as  the  grantees  may  choose;  branch  offices  may  be 
established  wherever  necessary.  Its  contracts,  shares,  bonds,  and 
titles  of  its  property  shall  never  be  subjected  by  the  Government  of 
Colombia  to  any  charges  for  registry,  emission,  stamps,  or  any  similar 
imposts  upon  the  sale  or  transfer  of  these  shares  or  bonds,  as  well  as 
on  the  profits  produced  by  these  values. 

Art.  19.  The  company  is  authorized  to  reserve  as  much  as  10  per 
cent  of  the  shares  emitted,  to  form  a  fund  of  shares,  to  the  benefit  of 
the  founders  and  promoters  of  the  enterprise.  Of  the  products  of  the 
concern  the  company  take,  in  the  first  place,  what  is  necessary  to  cover 
all  expenses  of  repairs,  operations,  and  administration,  and  the  share 
which  belongs  to  the  Government,  as  well  as  the  sums  necessary  for 
the  payment  of  the  interest  and  the  amortization  of  the  bonds,  and, 


168 


PANAMA   (  ANAL  TITLE. 


if  possible,  the,  fixed  interest  or  dividend  of  the  shares;  thai  which 
remains  will  be  considered  as  net  profit,  out  of  which  80  per  <  cut  at 
least  will  be  divided  among  the  shareholders. 

Akt.  20.  The  Colombian  Government  may  appoint  a  special  dele- 
gate in  the  council  of  administration  of  the  company  whenever  it  may 
consider  it  useful  to  do  so.  This  delegate  shall  enjoy  the  same  advant- 
ages as  are  granted  to  the  other  administrators  by  the  by-laws  of  the 
company. 

The  grantees  pledge  themselves  to  appoint  in  the  capital  of  the 
Union,  near  the  National  Government,  a  duly  authorized  agent  for  the 
purpose  of  clearing  up  all  doubts  and  presenting  any  claims  to  which 
this  contract  may  give  rise.  Reciprocally  and  in  the  same  sense,  the 
Government  shall  appoint  an  agent,  who  shall  reside  in  the  principal 
establishment  of  the  company  situated  on  the  line  of  the  canal;  and, 
according  to  the  national  constitution,  the  difficulties  which  may  arise 
between  the  contracting  parties  shall  be  submitted  to  the  decision  of 
the  federal  supreme  court. 

Akt.  21.  The  grantees,  or  those  wTho  in  the  future  may  succeed  them 
in  their  rights,  may  transfer  these  rights  to  other  capitalists  or  financial 
companies,  but  it  is  absolutely  prohibited  to  cede  or  mortgage  them 
under  any  consideration  whatever  to  any  nation  or  foreign  government. 

Art.  2^!.  The  grantees,  or  their  representatives,  shall  lose  the  right 
hereby  acquired  in  the  following  cases: 

1st.  If  they  do  not  deposit,  on  the  terms  agreed  upon,  the  sum  wrhich 
by  way  of  security  must  insure  the  execution  of  the  work. 

2d.  If  in  the  first  year  of  the  twelve  that  are  allowed  for  the  con- 
struction of  the  canal  the  works  are  not  already  commenced,  in  this 
case,  the  company  shall  lose  tin4  sum  deposited  by  the  way  of  security, 
together  with  the  interest  that  may  have  accrued,  all  of  which  will 
remain  for  the  benefit  of  the  Republic. 

3d.  If  at  the  end  of  the  second  period  fixed  in  paragraph  5  of  Arti- 
cle 1  the  canal  is  not  transitable,  in  this  case  also  the  company  shall 
lose  the  sum  deposited  as  security:  which,  with  the  interests  accrued, 
shall  remain  for  the  benefit  of  the  Republic. 

4th.  If  they  violate  the  prescriptions  of  Article  21;  and, 

5th.  If  the  service  of  the  canal  should  be  interrupted  for  a  longer 
period  than  six  months  without  its  being  occasioned  by  the  acts  of 
God,  &c. 

In  cases  2,  3,  4,  and  5  the  federal  supreme  court  shall  have  the 
right  to  decide  w  hether  the  privilege  has  become  annulled  or  not. 

Art.  23.  In  all  cases  of  decisions  of  nullity  the  public  lands  men- 
tioned in  clauses  7  and  8  of  Article  1,  and  such  lands  as  are  not  settled 
or  inhabited  from  among  those  granted  by  Article  4,  shall  revert  to 
the  possession  of  the  Republic  in  the  condition  the}7  ma}T  be  found  in, 
and  w  ithout  any  indemnit}T  whatever,  as  wTell  as  the  buildings,  mate- 
rials, works,  and  improvements  which  the  grantees  may  possess  along 
the  canal  and  its  accessories.  The  grantees  shall  only  retain  their  cap- 
ital, vessels,  provisions,  and  in  general  all  movable  property. 

Art.  24.  Five  years  previous  to  the  expiration  of  the  ninet}T-nine 
years  of  the  privilege  the  executive  power  shall  appoint  a  commis- 
sioner to  examine  the  condition  of  the  canal  and  annexes,  and,  with 
the  knowledge  of  the  company  or  its  agents  on  the  Isthmus,  to  make 
an  official  report,  describing  in  every  detail  the  condition  of  the  same 


PANAMA  CANAL  TITLE.  169 

and  pointing  out  what  repairs  may  be  necessary.  This  report  will 
serve  to  establish  in  what  condition  the  canal  and  its  dependencies 
shall  be  delivered  to  the  National  Government  on  t  he  day  of  expiration 
of  the  privilege  now  granted. 

Art.  25.  The  enterprise  of  the  canal  Is  reputed  to  be  of  public 
utility. 

Art.  26.  This  contract  which  will  serve  as  a  substitute  for  the  pro- 
visions of  law  33,  of  May  2(5,  1S76,  and  the  clauses  of  the  contract 
celebrated  on  the  28th  of  May  of  the  same  year,  shall  be  submitted 
for  the  approval  of  the  President  of  the  union  and  the  definite  accept- 
ance by  the  Congress  of  the  nation. 

In  witness  whereof  they  sign  the  present  in  Bogota,  on  the  20th 
March,  1878. 

EUSTORGIO  SALGAR. 

Lucien  N.  B.  Wysb. 
Bogota,  March.  23,  1878. 

Approved. 

The  President  of  the  u..ion: 

Aquileo  Parro. 
The  secretary  of  the  interior  and  of  foreign  relations: 

EUSTORGIO  SALGAR. 

To  the  Honorable  Secretary  of  the  Interior  and  Foreign  Relations: 

I  have  the  honor  to  inform  }Tou  that  I  accept  each  and  all  of  the 
modifications  introduced  by  Congress  to  the  contract  which  1  cele- 
brated with  Senor  Eustorgio  Salgar,  your  worthy  predecessor  in  the 
department  of  the  interior  and  foreign  relations,  for  the  construction 
of  the  interoceanic  canal,  which  contract  was  approved  by  the  executive 
power  under  date  of  March  23  last. 

The  modifications  to  which  1  have  alluded  are  those  recorded  in  law 
No.  28  of  the  18th  instant, 

I  hasten  to  lay  this  declaration  before  the  Government  of  Colombia, 
so  that  it  may  be  taken  in  consideration,  in  order  that  said  law  may 
be  effective  in  all  its  parts. 

Bogota,  May  18,  1878. 

Lucien  N.  B.  Wyse, 

Chief  of  the  International  Scientific  Com  mission 
for  the  Survey  of  the  Isthmus,  Member  and 
Delegate  from  the  Council  of  Administration  of 
the  Interoceanic  Canal  Association. 


170 


PANAMA  CANAL  TITLE. 


EXTENSION  OF  CONCESSION  DECEMBER  2<>,  1890. 

Additional  Contract  Modifying  that  of  March  23,  1878,  Approved  by  Law  28 

of  TnE  Same  Year. 

[Law  107  of  1890— December  96.} 

Extension  of  ten  years  for  the  opening  of  t/te  i/nterocecmic  ccmal  across 

( blomoian  territory. 

2o  { 

The  Congress  of  Colombia,  Decrees: 

Only  Article.  The  contract  modifying  that  of  March  23,  lv7s. 
for  the  opening  of  an  inter-oceanic  canal  across  Colombian  Territory, 
concluded  between  H.  E.  the  Minister  of  Foreign  Affairs,  and  Mr. 
Lucien  N.  B.  Wyse,  Special  Representative  of  the  Liquidator  of  the 
Compagnie  Universelle  du  Canal  de  Panama,  is  approved  in  all  its 
parts,  which  contract  is  literally  as  follows: 

Antonio  Roldan,  Minister  of  Foreign  Affairs,  duly  authorized  by 
his  Excellency,  the  President  of  the  Republic,  hereinafter  called  the 
''Government,"  of  the  one  part,  and  Lucien  N.  B.  Wyse,  Naval  Com- 
mander. Engineer,  original  Concessionary  of  the  inter-oceanic  canal, 
and  Special  Delegate  of  the  Liquidator  of  the  Compagnie  Universelle 
du  Canal  de  Panama,  under  powers  of  attorney  executed  at  Paris,  May 
16,  1890,  hereinafter  called  the  " Concessionary,"  of  the  other  part, 
have  agreed  to  modify  the  Contract  of  March  28.  1878,  for  the  open- 
ing of  an  inter-oceanic  canal  across  Colombian  Territory,  approved 
by  law  28  of  the  same  year,  in  accordance  with  the  following  stipula- 
tions: 

Article  First:  The  Government  grants  to  the  Liquidator  of  the 
Compagnie  Universelle  du  Canal  de  Panama,  an  extension  of  ten  years, 
within  which  the  canal  is  to  be  finished  and  put  in  public  operation; 
the  said  extension  is  consented  to,  subject  to  the  following  conditions: 

First.  The  Concessionary  agrees  to  transfer  all  the  assets  of  the 
Company  in  Liquidation  to  a  new  company  which  shall  undertake  the 
completion  of  the  work  of  the  Inter-oceanic  Canal. 

Second.  The  new  company  shall  be  formally  organized  with  a  cap- 
ital sufficient  for  this  purpose,  and  shall  resume  the  work  of  excava- 
tion in  a  serious  and  permanent  manner,  not  later  than  February  28, 
1893. 

Third.  The  Concessionary,  or  his  successors,  shall  furnish  monthly 
to  the  National  Government  of  Panama  the  sum  of  ten  thousand 
(10,000)  piastres,  in  Colombian  coin  of  0.835,  for  the  maintenance  of 
two  hundred  and  fifty  (250)  men  of  the  Military  Garrison  of  the  Depart- 
ment of  Panama,  whom  the  Government  undertakes  to  assign  for  the 
preservation  of  order,  and  for  the  security  of  the  line  of  the  canal 
during  the  work  of  excavation,  and  upon  its  termination  for  the  pro- 
tection of  inter-oceanic  transit. 

In  case  the  Company  should  have  need  of  a  greater  number  of  men 
of  the  public  forces,  the  goverment  will  assign  them  to  said  service, 
taking  them  from  the  Military  Garrison  of  the  Department,  but  the 
additional  expense  occasioned  by  this  increase,  reckoned  upon  the 
basis  already  established,  shall  also  he  borne  by  the  Company. 

The  company  binds  itself  to  furnish  places  for  the  lodging  of  the 
troops  upon  points  on  the  line  at  which  the  Government  has  none  of 
its  own.  The  last  part  of  article  8  of  the  original  contract  for  the 
privilege  is  modified  in  these  respects. 


PANAMA  CANAL  TITLE. 


171 


Fourth.  The  navigation  of  the  lakes  which  may  form  part  of  the 
canal  shall  be  free  to  small  vessels,  in  accordance  with  the  regulations 
which  the  company  may  prescribe  for  this  purpose.  The  latter  shall 
not  be  responsible  for  the  inherent  risks  of  this  navigation.  The 
internal  regulation  of  the  lakes  shall  la4  settled  by  the  Government  at 
the  proper  time,  taking  into  account  the  general  interests  of  the 
enterprise. 

Fifth.  The  company  binds  itself  to  reestablish  public  transit  at  the 
mouth  of  the  Rio  Grande,  by  means  of  bridges  or  boats,  as  it  shall  con- 
sider most  practicable,  and  if,  in  consequence  of  the  number  of  vessels, 
passage  should  become  hereafter  too  difficult,  the  company  shall 
reestablish  it  between  Emperador  and  Arraijan  to  the  satisfaction  of 
the  Government. 

Article  Second.  Beside  the  public  lands  granted  gratis  by  the  con- 
tract of  L878,  the  expropriation  of  lands,  buildings,  and  plantations 
which  shall  prove  necessary  to  the  canal  and  its  dependencies,  shall  be 
made  by  the  Government  on  account  of  the  company  in  conformity 
with  the  9th  condition  of  article  first  of  the  aforesaid  contract, 
approved  by  law  28  of  1878. 

Such  expropriations  shall  be  made  with  all  speed  which  the  legislation 
of  the  country  upon  the  subject  permits;  the  expropriated  real  estate 
shall  be  immediately  delivered  over  to  the  concessionary  or  his 
successors. 

Article  Third.  The  Government  also  undertakes  to  take  the  neces- 
sary steps  for  restoring  to  the  new7  company  the  complete  enjoyment 
of  the  lands  belonging  to  the  company  in  liquidation  unlawfully  occu- 
pied by  private  persons,  and  to  procure  a  judicial  decree  that  all  per- 
sons who.  without  previous  consent,  shall  have  built  or  planted  upon 
the  lands  bought  by  the  company  in  liquidation  for  the  purpose  of 
works  of  excavation,  installation,  and  unloading,  shall  have  no  right  to 
any  indemnity. 

Article  Fourth.  As  compensation  for  the  services  which  the  Gov- 
ernment agrees  to  render,  in  accordance  with  the  two  preceding  articles, 
the  concessionary,  or  his  successors,  shall  pay  to  the  Government  ten 
million  (10,000,000)  francs  in  gold,  and  shall  issue  to  it  gratis,  in  addi- 
tion, live  million  (5,000,000)  francs  in  ten  thousand  (10,000)  dividend 
bearing  shares  ^of  the  new  company  of  live  hundred  (500)  francs  each, 
full  paid,  having  the  right  to  no  other  dividends  than  those  which  are 
declared  on  ordinary  shares;  the  said  ten  thousand  (10,000)  shares  shall 
remain  attached  to  their  respective  stubs  until  the  other  shares  shall  be 
full  paid;  but,  upon  notice  to  the  company,  the  Government  shall  have 
the  power,  when  it  shall  see  lit,  to  assign  or  pledge  them. 

The  ten  million  (10,000,000)  francs  to  which  this  article  refers  shall 
be  paid  by  the  concessionary,  or  by  his  successors,  in  live  (5)  equal 
annual  installments;  the  first  being  paid  three  (3)  months  after  the 
new  company  for  the  completion  of  the  eanal  shall  be  fully  organized, 
in  conformity  with  the  second  condition  of  article  first.  From  this 
sum  shall  be  deducted  two  million  five  hundred  thousand  (2,500,000) 
francs,  as  well  as  the  interest  accrued  up  to  the  date  of  the  present 
contract,  which  the  Government  owes  to  the  company  in  liquidation 
for  the  loan  of  1883,  the  deduction  being  made  in  the  first  place  for 
the  purpose  of  fixing  the  amount  of  the  five  (5)  installments  just  men- 
tioned.   By  this  payment  the  said  loan  shall  be  finally  discharged. 

Article  Fifth.  A  special  member,  whom  the  Government  has  the 


172 


VANAMA   CANAL  TITLE. 


right  to  appoint  in  the  company's  council  of  administration  in  con  form 
ity  with  article  twenty  of  the  contract  in  force,  shall  enjoy  in  the  new 
company  to  be  organized  for  the  completion  of  the  canal  the  same 
advantages  and  compensation  granted  to  the  other  administrators  by  the 
charter  of  the  company,  but  neither  the  said  appointee  nor  the  official 
agent  of  the  Government  residing  in  the  Isthmus,  shall  make  any  pub- 
lication relative  to  the  company  without  the  express  authorization  of 
the  Government. 

Article  Sixth.  If  the  new  company  for  the  completion  of  the 
canal  shall  not  be  organized,  and  if  the  work  of  excavation  on  the 
canal  shall  not  be  resumed  within  the  period  fixed  by  the  second  con- 
dition of  article  first,  the  contract  in  force  shall  lapse  and  the  Republic 
shall  enter  into  the  possession  and  enjoyment,  without  the  necessity  of 
a  previous  judicial  decree,  and  without  indemnity,  of  the  works  of  the 
canal  and  its  annexes,  which  revert  to  it  in  accordance  with  article 
third  of  the  contract  of  1878. 

Sec.  1st.  It  is  understood  that  the  contract  shall  also  lapse  and  the 
provisions  of  this  article  shall  become  applicable  if  the  company  for 
the  completion  of  the  canal  not  being  organized  before  February  28, 
L893,  the  legal  representative  of  the  Compagnie  Universelle  du  (anal 
Interoceanique,  or  his  successors,  abandon  the  maintenance  of  the 
works,  plant,  and  buildings  now  existing  upon  tin4  Isthmus  and  belong- 
ing to  the  company. 

Sec.  2nd.  The  maintenance  of  the  property  specified  in  the  preced- 
ing paragraph  shall  be  considered  abandoned  when  the  legal  repre- 
sentative of  the  Compagnie  Universelle  du  Canal  Interoceanique,  in 
liquidation,  or  his  successors,  shall  discharge  the  force  of  employees 
which  he  now  has  on  the  Isthmus,  or  shall  cease  to  make  the  neces- 
sary expenditure  for  preventing  the  loss  or  deterioration  of  the  -aid 
property. 

Sec.  3rd.  It  is,  moreover,  understood  that  the  buildings,  plant,  works, 
and  improvements  which  are  to  become  the  property  of  the  Republic 
under  the  circumstances  provided  in  this  article,  and  in  conformity 
with  article  23  of  the  contract  of  1878,  shall  be  inalienable,  and  are  to 
be  in  good  condition,  subject  to  deterioration  arising  from  use.  from 
unavoidable  causes,  or  from  accident. 

Article  Seventh.  As  soon  as  the  company  for  the  completion  of 
the  canal  shall  be  legally  organized,  and  shall  have  resinned  the  work, 
in  conformity  with  the  provisions  of  the  second  condition  of  article 
first  of  this  contract,  the  Government  shall  assign  to  it  in  the  depart- 
ment of  Panama  the  two  hundred  and  fifty  thousand  (250,000)  hectares 
of  public  lands  to  which  it  has  been  already  declared  by  decisions  of 
the  Executive  power  to  be  entitled,  and  shall  issue  to  it  the  respective 
patents,  provided  that  the  legal  formalities  in  the  premises  be  accom- 
plished on  the  part  of  the  company. 

Article  Eighth.  The  security  of  seven  hundred  and  fifty  thousand 
(750,000)  francs  deposited  by  the  canal  company  in  accordance  with 
article  second  of  the  contract  in  force,  shall  be  maintained  as  a  guaranty 
for  the  fulfillment  of  the  obligations  arising  from  the  said  contract, 
and  of  those  assumed  by  the  concessionary  under  the  provisions  of  the 
present  contract. 

Article  Ninth.  All  rights  and  obligations  created  by  the  contract 
of  March  23,  1878,  for  the  opening  of  an  interoceanic  canal  across 
Colombian  territory,  approved  by  law  28  of  the  same  year,  shall  con- 


PANAMA  CANAL  TITLE. 


173 


fcinue  in  full  force  and  vigor  without  other  restrictions  and  modifica- 
tions than  those  contained  in  the  present  contract. 

Article  Tenth.  In  order  that  the  present  contract  may  have  full 
force  and  effect,  it  shall  besubmitted  to  tin4  approval  of  His  Excellency 
the  President  of  the  Republic,  and  to  that  of  Congress. 

Done  in  duplicate,  at  Bogota,  the  10th  day  of  December,  one  thou- 
sand eight  hundred  and  ninety. 

Antonio  Roldan. 
Lucien  N.  B.  Wyse. 


EXTENSION  OF  CONCESSION,  APRIL  4,  1893. 
Contract  of  Extension. 


[Diario  Oficial  of  Bogota,  April  5,  1893— No.  9125.] 


Contract  granting  extension  to  the  Panama  Canal  Company — in 

liquidation. 

Between  Marco  F.  Suarez,  Minister  of  Foreign  Affairs,  duly 
authorized  by  his  Excellency,  the  Vice-President  of  the  Republic,  and 
in  aecordanee  with  the  powers  granted  to  the  Executive  Power  by  Law 
91  of  1892,  hereinafter  called  "the  Government,"  of  the  one  part, 

And  Francois  Mange,  Engineer,  Administrator  of  the  operations  of 
the  liquidation  on  the  Isthmus,  Special  Representative  of  the  Liquidator 
of  the  Compagnie  Universelle  du  Canal  de  Panama,  under  powers  of 
attorney  granted  him  at  Paris,  January  21-,  1893,  hereinafter  called 
"the  Concessionary,"  of  the  other  part;  it  has  been  agreed  to  modify 
the  contracts  of  March  23,  1878,  and  December  10,  1890,  for  the  open- 
ing of  an  inter-oceanic  canal  across  Colombian  Territory,  in  conformity 
with  the  following  stipulations: 

Article  First. 

The  extension  of  ten  years  granted  in  Article  First  of  the  Contract 
of  1890  to  the  Liquidator  of  the  Compagnie  Universelle  du  Canal  de 
Panama,  remains  in  force,  subject  to  the  conditions  then  provided, 
except  the  Second,  which  is  modified  by  the  extension  until  October 
31st,  1894,  of  the  period  within  which  the  new  Company  is  to  be 
formed  and  work  on  the  Canal  is  to  be  resumed  in  a  serious  and  per- 
manent manner. 

The  term  of  ten  }^ears  shall  begin  to  run  from  the  date  of  the  formal 
organization  of  the  new  Company. 

Art.  2. 

The  Concessionary  or  his  successor  acknowledges  the  validity  of  the 
former  contracts  and  of  the  present  contract  and  binds  himself  to  do, 
in  France,  all  acts  necessary  to  insure  its  validity.  These  proceedings 
are  to  be  concluded  not  later  than  August  31st  next. 


174 


PANAMA   CANAL  TITLE. 


Art.  3. 

As  compensation  for  the  extension  which  the  Government  grants 
by  Article  First  and  to  indemnify  it  for  the  ad  vantages  which  it  relin- 
quishes accordingly,  the  Concessionary  or  his  successor  acknowledges 
an  indebtedness  in  favor  of  the  Republic,  amounting  (<>  the  sum  of 
Two  million  francs  in  gold  (2,000,000  francs),  which  added  to  the  Ten 
millions  provided  in  Article  4  of  the  Contract  of  L890,  constitutes  a 
total  indebtedness  of  Twelve  million  francs  (12,000,000  francs),  in  favor 
of  Colombia,  exclusive  of  Five  million  francs  (t>,000,000  francs)  in 
Ten  thousand  shares,  also  mentioned  in  the  Article  aforesaid. 

Art.  4. 

The  contracting  parties  further  agree  thai  from  the  Twelve  millions 
which  have  just  been  mentioned  in  the  preceding  Article  shall  be 
deducted  tin1  sum  of  Four  million  francs  which  the  Colombian  Gov- 
ernment and  the  Treasury  of  the  Department  of  Panama  owe  to  the 
Company  in  liquidation  for  the  loan  of  L883  and  its  interest  and  for 
services  and  material  furnished  to  the  administration  of  this  Depart- 
ment from  1881  to  1892.  Accordingly,  this  debt  becomes  finally  extin- 
guished, leaving  the  Republic  free  from  all  obligation  with  regard  to 
this  matter,  and  reducing  to  Eight  million  francs  in  gold  (8*,000,000 
francs),  the  sum  which  the  new  Company  is  to  pay  to  the  Government. 

Art.  5. 

The  eight  million  francs  mentioned  in  the  preceding  Article  shall  be 
paid  by  the  Concessionary  or  his  successor  in  the  following  manner: 

150,000  francs  August  31st,  1893; 
150,000  francs  October  31st,  1893; 
200,000  francs  December  31st,  1893. 

The  remainder  shall  be  paid  in  four  annual  instalments,  the  first 
to  be  paid  three  months  after  the  new  Company  for  the  completion  of 
the  Canal  shall  be  formally  organized.  The  first  of  these  instalments 
shall  be  One  million  five  hundred  thousand  francs  (1,500,000  francs) 
and  the  three  others,  Two  millions  each  (2,000,000  francs). 

Art.  6. 

The  Republic  shall  enter  into  possession  and  ownership,  without 
need  of  previous  judicial  decision  and  without  any  indemnity,  of  the 
Canal  itself  and  the  annexes  dependent  thereon,  in  conformity  with 
the  contracts  of  1878  and  1890,  in  each  of  the  following  eases: 

If  the  new  Company  shall  not  be  organized  within  the  period  fixed 
by  Article  First; 

If  the  work  shall  not  be  resumed  within  the  period  fixed  by  the 
same  Article; 

If  the  Liquidator  sells  the  propert}T  which  is  to  belong  to  the  Republic 
in  case  of  lapse  or  abandons  its  maintenance,  all  in  conformity  with 
the  provisions  of  the  previous  contracts,  saving  acid  excepting  deterio- 
ration arising  from  use,  unavoidable  causes  or  from  accident; 

If  the  inventory  mentioned  in  Article  7  of  the  present  contract  shall 
not  be  made. 

If  the  conditions  of  Article  2  of  the  same  contract  shall  not  be 
ulfilled. 


panama  canal  title.  175 
Art.  7. 

A  general  inventory  of  the  property  of  the  Company  in  liquidation, 
which  shall  comprise  as  well  the  property  which  is  to  belong  to  the 
Government  in  case  of  lapse,  as  that  w  hich  is  to  belong  to  the  Com- 
pany in  liquidation,  shall  be  prepared  upon  the  Isthmus.  It  is  under- 
stood that  rolling  stock  and  floating  plant  shall  he  comprised  in  this 
inventory,  which  is  to  be  made  in  conjunction  with  the  Agent  of  the 
Government  at  Panama,  and  is  to  be  completed  not  later  than  August 
31st,  1893. 

Art.  8. 

The  security  of  Severn  hundred  and  fifty  thousand  francs  (750,000 
francs)  deposited  in  conformity  with  the  contract  of  1878,  by  the 
Canal  Company,  and  confirmed  by  the  contract  of  1890,  shall  be  main 
tained  as  a  guarantee  for  the  fulfillment  of  the  obligations  arising 
from  the  said  contracts  and  those  to  which  the  Concessionary  agrees 
by  the  present  contract. 

Art.  9. 

Disputes  which  may  arise  between  the  contracting  parties  with 
regard  to  the  present  contract  or  the  former  contract,  shall  be  sub- 
mitted to  the  Supreme  Court  of  Justice  of  Colombia. 

In  conformity  with  the  provisions  of  Article  7  of  law  145  of  1888, 
the  Concessionary  waives  the  right  to  diplomatic  intervention  concern- 
ing the  duties  and  rights  arising  from  the  three  contracts,  except  in 
case  of  denial  of  justice. 

Art.  10. 

All  rights  and  obligations  arising  from  Contract  of  March  23rd,  1878 
and  contract  of  December  10th,  1890  for  the  excavation  of  an  inter- 
oceanic  canal  across  Colombian  Territory,  approved  by  lawT  28  of  1878, 
and  by  law  107  of  1890,  shall  continue  in  full  force  and  vigor,  without 
other  modifications  than  those  provided  in  the  present  contract. 

Art.  11. 

The  Concessional  declares  that  he  accepts  all  the  provisions  of  the 
present  contract  which  impose  special  obligations  upon  the  Liquidator 
as  well  as  those  which  affect  the  Company  which  may  be  formed. 

Art.  12. 

The  present  Contract  must,  in  order  to  be  valid,  be  approved  by  His 
Excellency,  the  Vice-President  of  the  Republic. 

Done,  in  duplicate,  at  Bogota,  the  fourth  day  of  April,  one  thousand 
eight  hundred  and  ninety-three. 

Marco  F.  Suarez. 
Francois  Mange. 
Executive  Government — Bogota,  April  4,  1893. 

Approved. 

[l.  s.]    M.  A.  Caro. 

The  Minister  of  Foreign  Affairs, 
Marco  F.  Suarez. 


17<> 


PANAMA  CANAL  TITLE. 


EXTENSION  OF  CONCESSION,  APRIL  26,  1900. 

[Number  11278.    "  Diario  Oficial"  Bogota,  May  7,  1900.   Ministry  of  Finance] 

Contract  relative  to  the  granting  of  an  extension  of  time  to  the  New 
Comjjany  of  the  Panama  Canal. 

Whereas,  The  National  Executive  Power  has  issued  the  fol- 
lowing 

Decree  Number  721  of  1900. 
(April  23.) 

by  which  provision  is  made  for  the  granting  of  an  extension  of  time 
to  the  New  Company  of  the  Panama  (anal. 

The  President  of  the  Republic 
Having  seen  tin1  memorial  by  which  the  New  Company  of  the 
Panama  (anal  has  solicited  of  the  Government  an  extension  of  six- 
years  for  tin1  completion  of  the  work  and  putting  it  into  public 
service;  and  having  seen  the  communications  in  which  the  Special 
Agent,  Dr.  Nicolas  Esquerra,  expounds  to  the  Government  to 
public  expediency  of  granting  the  extension  herein  considered, 

"  Decrees 

Art.  1.  The  Government  may  grant  to  the  New  Company  of  the 
Panama  Canal  an  extension  for  the  fixed  term  of  six  years  to  com- 
plete the  work  and  put  it  into  public  use.  Provided  that  it  shall  de- 
posit at  the  disposition  of  the  National  Treasury,  within  one  hundred 
and  twenty  days,  computed  from  the  date  on  which  this  instrument 
shall  be  notified  to  the  said  Company  in  such  bank  or  establish- 
ment as  may  be  designated  by  the  Government,  five  millions  of  francs 
(frs.  5,000,000)  in  French  gold. 

Art.  2.  Tin1  said  extension  will  begin  to  run  on  the  31st  day  of 
October,  L904.  Consequently  the  canal  must  be  completed  and  put 
into  public  use  on  the  31st  day  of  October,  1910.  at  the  latest. 

Let  it  In1  communicated  and  published. 

Given  at  Pena,  Department  of  Cundinamarca,  this  23d  day  of  April, 
1900. 

Manuel  A.  Sanclemente. 
The  Minister  of  State.  Rafael  M.  Palacio. 

The  Minister  for  Foreign  Affairs,         Carlos  Cuervo  Marquez. 
The  Minister  of  Finance,  Carlos  Calderon. 

The  Minister  of  War.  Jose  Santos. 

The  Minister  of  Public  Instruction,       Morco  F.  Suarez. 
The  Minister  of  the  Treasury.  Marceliano  Vargas. 

Now,  therefore,  we,  to-wit:  Carlos  Calderon,  Minister  of  Finance 
of  the  Republic,  duly  authorized  by  the  Executive  Power,  on  the  one 
part,  and,  on  the  other  part,  Alejandro  N.  Mancini,  in  his  capacity  of 
Agent  of  the  New  Company  of  the  Panama  Canal  and  as  representa- 
tive of  the  same,  by  virtue  of  the  power  of  attorney  which  he  has  laid 
before  the  Ministry  of  Finance,  have  executed  the  following  contract. 

Art.  1.  The  Government  of  the  Republic  grants  to  the  New  Com- 
pany of  the  Panama  Canal  a  deLay  of  six  }Tears,  from  the  31st  of  Octo- 
ber, 1904,  in  which  to  complete  the  work  on  the  Canal  and  deliver  it 
to  the  public  service,  under  the  terms  of  the  existing  contracts.  In 


PANAMA  CANAL  TITLE.  177 

consequence  the  said  work  shall  have  to  be  completed  and  put  into  the 
public  service  on  the  31st  day  of  October,  L910. 

Art.  2.  In  consideration  of  the  extension  referred  to  in  the  Pore- 
going  article,  the  New  Company  of  the  Panama  (anal  will  pay  t<>  the 
Republic  the  sum  of  live  millions  of  francs  (francs  5,000,000)  in  French 
coin,  in  the  city  of  Paris,  ninety  days  from  the  date  on  which  this 
contract  shall  have  been  approved  by  the  Most  Excellent  President  of 
the  Republic.  Said  payment  shall  be  made  by  the  Company  to  the 
firm  or  bank  in  the  city  of  Paris  in  whose  favor  the  Minister  of  the 
Treasury  of  the  Republic  may  draw. 

Art.  3.  This  contract  requires  the  approval  of  the  Council  of  Min- 
isters and  that  of  the  Most  Excellent  President  of  the  Republic. 

In  witness  whereof,  we  have  signed  three  copies  of  even  tenor  at 
Bogota,  this  twenty-fifth  day  of  April,  one  thousand  nine  hundred. 

Carlos  Calderon — Alejandro  N.  Mancini. 
Presidency  of  the  Council  of  Ministers,  Bogota, 
April  25,  1900. 

In  the  session  of  this  day  the  foregoing  contract  was  examined  and 
unanimously  approved. 

The  President,  Carlos  Cuervo  Marquez, 
The  Secretary  ad  hoc,  Alejandro  M.  Olivares. 
National  Executive  Power:  Pena  Department  of  Cundinamarca, 
April  26, 1900. 

Approved. 

Manuel  A.  Sanclemente. 

The  Minister  of  Finance, 

Carlos  Calderon. 


EXHIBIT  D. 

EVIDENCE  OF  PAYMENTS  TO  COLOMBIA  SINCE  DECEMBER  31,  1893. 

Sec.  1,  No.  1550.]  Republic  of  Colombia, 

The  Ministry  of  Treasury, 

Bogota,  September  12,  1896. 
The  Director  of  the  New  Panama  Canal  Company, 

Paris. 

On  the  31st  day  of  October  proximo  deliver  to  the  Messrs.  Schloss 
&  Bros.,  of  London,  two  million  francs  (fr.  2,000,000),  being  the 
annual  payment  due  January,  1897.  Said  delivery  will  be  made  in 
accordance  with  the  contract  between  the  Government  of  this  Republic 
and  the  company  you  represent  as  administrator,  respecting  antici- 
pated discount  and  formalities  required  in  making  the  annual  pavment 
due.  (1896.) 

Your  most  obedient  servant, 

(Signed.)  Manuel  Ponce  de  Leon. 

Certified  to  be  a  copy  of  the  original. 
The  chief  of  the  general  accounts, 

Marie. 


8751—02  12 


17S 


PANAMA  CANAL  TITLE. 


Sec.  1,  No.  7139.]  Republic  of  Colombia, 

Ministry  of  Treasury, 

Bogota,  May  28,  1U00. 

Mr.  Alejandro  Mancini: 

For  your  information  I  beg  to  transmit  the  following  communication 
and  the  resolution  pertaining  to  same: 

Sec.  1,  No.  159.]  Republic  of  Colombia,  Ministry  ok  War, 

Bogota,  May  26,  1900. 

The  Minister  of  the  Treasury: 

In  conformity  with  authorization  received  from  His  Excellency  the  President  of 
the  Republic,  communicated  through  the  minister  of  state  in  the  telegram  J  had  the 
honor  to  transcribe  for  you  in  my  official  note  No.  15."),  dated  the  22d  instant,  I  beg 
to  state  that  this  ministry  notified  the  banking  house  of  Fould  &  Co.,  of  Paris,  to 
accept  as  a  deposit  the  five  million  francs,  French  gold,  which  is  to  he  paid  by  the 
New  Panama  Canal  Company  for  the  concession  of  "prolongation,"  as  I  had  the 
honor  of  informing  you,  for  the  conclusion  of  the  business. 
I  am,  sir,  your  obedient  servant, 

Manuel  Casabianca. 

Sec.  1.]  Ministry  of  Treasury, 

Bogota,  May  26,  1900. 

Instruct  the  representative  of  the  New  Panama  Canal  Company  in  this  city  and 
inform  the  hanking  house  of  Fould  &  Co.  to  receive  the  consignment  without  dis- 
count or  commissi* »n. 

By  the  minister,  the  secretary: 

Ignacio  K.  Pineros. 

Your  obedient  servant. 
By  the  minister  in  charge: 
The  subsecretary, 

(Signed)  Ignacio  R.  Pineros. 

Certified  to  be  a  copy  of  the  orginal. 
The  chief  of  the  general  accounts, 

Marie. 


exhibit  e. 

BY-LAWS  OF  THE  OLD  PANAMA  CANAL  COMPANY. 

Title  First. — Creation  and  object  of  the  company,  denomination , 
residence,  a?id  duration. 

Article  1.  There  is  created,  between  Mr.  Ferdinand  de  Lesseps,  the 
conferees,  and  the  subscribers  to  shares  hereafter  created,  a  company 
under  the  denomination  of  the  "  Universal  Interoceanic  Panama  Canal 
Co." 

Article  2.  This  company  has  for  object: 

First.  The  construction  of  a  maritime  canal  for  large  navigation 
between  the  Atlantic  and  Pacific  oceans,  through  the  part  of  the 
American  isthmus  belonging  to  the  United  States  of  Colombia. 

Second.  The  exploitation  of  the  said  canal  and  sundry  enterprises 
belonging  thereto. 

Third.  The  construction  or  exploitation  of  all  lines  of  railroad  which 
the  company  should  deem  for  the  good  of  the  undertaking  to  he  con- 
structed or  brought  in  the  vicinity  of  the  canal. 

Fourth.  The  exploitation  of  lands  conceded  and  mines  contained 
therein. 


PANAMA  CANAL  TITLE. 


171) 


The  whole  according-  to  the  clauses  and  conditions  of  the  concession, 
such  as  result  from  the  law  of  the  Congress  of  the  United  States  of 
Colombia  dated  May  L8th,  L878.    (Law  28  of  1878.) 

Article  3.  The  office  of  the  said  company  is  in  Paris,  temporarily 
No.  7  Rue  Saint  Florentin,  at  the  domicile  of  Mr.  Ferdinand  de 
Lesseps,  and  hereafter  in  such  locality  as  the  hoard  of  directors  may 
select. 

Article  4.  The  company  commences  to  date  from  the  day  of  its 
final  creation.  Its  duration  shall  be  equal  to  that  of  the  concession; 
that  is  to  say,  ninety-nine  (91))  years,  to  he  reckoned  from  the  day 
when  t  he  canal  will  he  opened  in  whole  or  in  part  to  the  public  service, 
or  when  the  grantee  company  will  commence  to  receive  tolls  for  transit 
and  navigation. 

Title  Second.—  Contribution,  social  capital,  share,  and  payments. 

Article  5.  In  virtue  of  the  conditions  agreed  upon  between  him 
and  the  International  Civil  Company  of  the  Interoceanic  Canal,  grantee 
of  said  canal,  Mr.  Ferdinand  de  Lesseps  brings  to  the  company,  with 
a  guarantee  of  right  in  the  matter: 

First,  The  concession  to  this  civil  company  by  the  Government  of 
the  United  States  of  Colombia  of  the  exclusive  privilege  for  the  excava- 
tion through  its  territory  and  for  the  exploitation  of  a  maritime  canal 
between  the  Atlantic  and  Pacific  oceans,  with  all  its  advantages,  as  also 
with  all  its  charges  stipulated  by  the  law  of  Congress  of  the  United 
States  of  Colombia  dated  18th  of  May,  1878.    (Law  28  of  1878.) 

Second.  All  surveys,  work,  and  documents  appertaining  to  the  said 
grantee  company  relative  to  the  line  and  the  project  submitted  to  the 
International  Congress  of  Study-  of  the  Interoceanic  Canal. 

Third.  The  benefit  of  all  the  agreements  which  the  said  grantee  com- 
pany has  obtained  from  the  council  of  administration  of  the  Panama 
Railroad  Company. 

The  company  will  be  the  owner  of  this  contribution  from  the  date 
of  its  final  creation.  It  will  be  substituted,  starting  from  this  date,  to 
all  the  rights  and  obligations  resulting  from  the  law  of  concession  of 
United  States  of  Colombia. 

Article  6.  In  view  of  this  contribution,  in  order  to  conform  to  the 
obligation  which  Mr.  Ferdinand  de  Lesseps  has  had  to  assume  to  assure 
to  the  company  hereby  created  the  said  contribution,  there  is  allotted 
to  the  civil  company  the  beneficiary  of  the  law  of  concession  of  May 
18th,  1878. 

First,  One  million  (1,000,000)  of  francs,  cash,  to  be  paid  within 
fifteen  (15)  days  from  date  of  the  final  creation  of  the  said  company. 

Second.  Four  millions  (4,000,000)  of  francs,  cash,  payable  without 
interest  in  the  month  which  will  follow  the  date  fixed  by  the  council  of 
administration  of  the  present  company  for  the  payment  of  the  sum 
which  will  complete  the  liberation  of  one-half  of  the  shares  subscribed, 
which  will  be  hereafter  mentioned. 

Third.  And  five  millions  (5,000,000)  of  francs,  the  value  of  ten 
thousand  (10,000)  shares,  five  hundred  (500)  francs  each,  of  the  said 
company,  entirely  liberated. 

These  ten  thousand  (10,000)  shares  entirely  liberated  will  be  the 
property  of  the  grantee  civil  company,  starting  from  the  final  creation 
of  the  present  company,  but  they  shall  not  be  delivered  and  shall  be  of 
no  profit  to  them,  except  under  the  reservations  following. 


L80 


PANAMA  CANAL  TITLE. 


Up  to  their  delivery,  which  will  be  regulated  and  determined,  they 
will  be  registered  in  the  names  of  those  having  rights  to  the  civil  com- 
pany, and  will  remain  attached  to  the  stub  with  the  effect  of  a  pledge 
for  the  exclusive  guarantee  of  the  authenticity  of  the  law  of  conces- 
sion and  of  the  claims  that  a  third  party  might  bring  against  the  civil 
company  for  services  rendered.  The  civil  company  may  exact  the 
remittance  of  said  shares  to  the  rightful  claimant,  either  when  the  sub- 
scribed shares  will  he  liberated  entirely  or  when  the  company  hereby 
created  shall  have  called  either  upon  its  shares  or  by  means  of  a  loan 
for  the  payment  of  a  total  capital  of  five  hundred  millions  (500,000,000) 
of  francs. 

These  ten  thousand  (10,000)  shares,  though  they  may  be  entirely 
liberated,  or  if  they  remain  attached  to  the  stub,  or  that  they  may  be 
detached  in  the  above  aforeseen  case  before  the  entire  liberation  of  the 
shares  subscribed,  will  not  have  any  right  to  interest  or  dividend, 
except  on  the  same  conditions  of  other  subscribed  shares,  so  that  dur- 
ing the  period  of  the  construction  of  the  canal  they  will  have  no  right 
to  an  interest  of  5  per  cent  only  upon  the  amount  of  capital  called  Col- 
on the  subscribed  shares  and  as  fast  as  installment-  are  called. 

While  these  ten  thousand  (lo,0<><>)  shares  remain  attached  to  the  stub 
the  interest  or  dividends  which  may  be  due  w  ill  be  paid  to  the  holders 
upon  special  certificates  which  will  be  delivered  to  them  in  conformity 
to  the  model  which  may  be  determined  by  the  council  of  administration 
of  the  company  hereby  created. 

The  delivery  of  tin1  securities  and  moneyT  by  the  company  will  take 
place  for  the  benefit  of  the  civil  company  in  the  terms  agreed  between 
Mr.  Ferdinand  de  Lesseps  and  the  said  civil  company. 

Article  7.  On  the  other  hand  to  organize  the  present  company  and 
to  prepare  its  creation  in  1879,  as  well  as  in  1880,  Mr.  Ferdinand  de 
Lesseps  has  had  to  make  an  appeal  for  capital  and  the  help  of  persons 
devoted  to  the  creation  of  this  enterprise. 

The  accounts  of  expenses  made  or  pledged  for.  previously  to  the  final 
creation  of  the  company,  will  be  presented  at  the  first  general  meeting 
of  shareholders  and  submitted  for  the  approbation  of  the  second  meet- 
ing, and  after  approbation  the  amounts  of  these  expenses  will  become 
a  company  debt. 

Besides,  the  present  by-laws  will  stipulate  hereafter,  under  article 
60,  with  such  reserve  as  therein  expressed  for  the  benefit  of  sundry 
persons  whose  capital  and  help  have  served  t'o  the  creation  of  the 
present  company,  15%  upon  the  net  profits  of  the  enterprise. 

The  apportionment  of  this  15%  shall  be  made  under  the  care  of 
Mr.  Ferdinand  de  Lesseps  in  the  terms  agreed  between  him  and  his 
auxiliaries. 

Article  8.  The  compam^s  capital,  made  up  of  contributions  in 
nature  and  in  cash  capital,  is  fixed  to  three  milliards  of  francs,  and 
divided  in  six  hundred  thousand  shares  of  500  francs  each. 

Ten  thousand  shares  being  allotted  to  the  grantees  for  representa- 
tion of  their  contribution,  there  shall  be  issued  five  hundred  and  ninety 
thousand  shares  cash. 

Article  9.  The  amount  of  each  share  is  payable  in  cash  at  the  rate 
of  exchange  in  Paris,  in  the  company's  office  or  to  the  representatives 
of  the  company  which  will  be  designated  for  subscription  by  the 
appearing  founder  and  in  the  future  by7  the  council  of  administration. 

Twenty-five  francs  shall  be  paid  immediately  upon  each  share  at  the 


PANAMA   CANAL  TITLE. 


1K1 


time  of  subscription  and  one  hundred  francs  more  shall  be  paid  after 
its  close. 

The  throe  hundred  ;md  seventy-five  francs  in  addition  shall  remain 
in  reserve,  and  will  only  bo  called  subsequently  to  the  time  and  in  the 
proportion  which  will  be  iixed  by  the  council  of  administration. 

No  payments  shall  bo  made  previous  to  a  call  for  funds. 

They  will  bo  made  in  conformity  to  calls  of  the  council  by  means  of 
advertisement,  three  months  in  advance  in  one  of  the  Paris  newspa- 
pers authorized  to  receive  Legal  advertisements,  and  in  foreign  news- 
papers which  may  bo  selected  by  the  council  of  administration. 

Article  10.  The  first  payment  will  be  acknowledged  by  a  nomi- 
native receipt  which  during  the  six  months  commencing  from  the 
creation  of  the  company  will  bo  exchanged  against  a  cortiticate  also 
nominative. 

All  following  payments  to  be  made  except  the  last  will  be  men- 
tioned upon  this  temporary  certificate. 

The  last  payment  shall  be  made  against  the  delivery  of  a  final  share, 
nominative  or  to  bearer,  at  the  option  of  the  holder. 

However,  shares  half  paid  may  be  converted  into  shares  to  bearer 
by  resolution  of  a  general  meeting. 

Article  11.  The  council  of  administration  will  determine  the  form 
and  style  of  the  share  certificates. 

Temporary  certificates  will  be  detached  from  the  stub  of  a  register; 
they  will  be  in  numerical  order  and  will  be  stamped  with  the  dry  seal 
of  the  company;  they  will  be  signed  by  two  administrators  or  by  an 
administrator  and  a  delegate  from  the  council  of  administration. 

Article  12.  All  subscriptions  on  which  the  second  payment  com- 
pleting the  first  quarter  shall  not  have  been  made  at  the  time  set  upon 
for  its  call  shall  be  considered  null  and  void  without  legal  notice  and 
with  full  right. 

The  first  payment  becomes  the  property  of  the  company  as  damages. 

Article  13.  In  default  of  payment  of  the  other  installments  at  the 
time  determined,  interest  will  be  due  for  each  day  of  delay  at  the  rate 
5  per  100  per  year. 

The  company  besides  will  have  the  right  to  have  such  shares  sold 
upon  which  payments  are  in  arrear. 

To  this  effect  the  numbers  of  such  shares  will  be  published  as  in 
default  in  one  of  the  newspapers  of  Paris  designated  to  receive  legal 
notices. 

Two  months  after  such  publication  the  company,  without  any  demand 
in  due  form  of  law  and  without  any  subsequent  formality,  shall  have 
the  right  to  proceed  with  the  sale  of  the  said  shares  for  the  account 
of  and  at  the  risk  and  peril  of  the  defaulter. 

Such  sale  will  be  made  upon  duplicates  one  or  several  times  at  the 
Paris  Bourse  or  at  London  through  the  agency  of  a  stock  broker. 

The  previous  certificates  of  shares  thus  sold  shall  become  null  b}^ 
full  right  by  the  fact  of  the  sale;  there  shall  be  delivered  to  the 
purchasers  new  certificates  which  will  bear  the  same  numbers  and  w  ill 
be  the  only  ones  valid. 

In  consequence  all  shares  not  bearing  the  regular  mention  of  install- 
ments to  be  paid  cease  to  be  negotiable. 

The  stipulations  prescribed  in  the  present  and  the  preceding  article 
do  not  prevent  the  simultaneous  use  by  the  company  of  ordinary  means 
of  right,  if  deemed  useful,  against  the  delinquent  shareholders. 


1X2  PANAMA   CANAL  TITLE. 

Article  14.  The  money  received  from  the  sales  made  in  virtue  of 
the  preceding  article,  deducting  expenses  and  interest,  is  imputed  in 
the  terms  of  right  upon  what  is  due  by  the  expropriated  stocknolderor 
by  his  transferees  who  remain  responsible  for  the  difference,  if  there 
is  any  deficit,  and  who  are  benefited  by  the  excess  if  excess  there  be. 

A  RTICLE  L5.  The  council  of  administration  may  authorize  t  be  deposit 
and  the  preservation  of  the  shares  to  bearer  in  the  company's  hands. 
In  such  a  ease  it  will  determine  the  form  of  nominative  certificates  of 
deposit,  the  conditions  of  their  delivery,  and  the  guarantees  with  which 
the  execution  of  such  measure  should  be  surrounded  in  the  interest  of 
the  company  and  the  shareholders. 

Article  16.  The  transfer  of  shares  to  bearer  is  made  by  a  simple 
exchange  of  the  certificates. 

For  receipts  and  nominative  shares  the  exchange  will  be  made  by  a 
declaration  of  transfer  signed  by  the  transferrer  and  the  transferee, or 
their  substitutes,  upon  registers  to  be  kept  in  the  office  of  the  com- 
pany or  of  those  of  its  representatives  designated  for  that  purpose  by 
the  council  of  administration  wherever  needed. 

The  company  may  require  that  the  signature  of  the  parties  should 
be  duly  certified. 

Article  17.  Each  share  carries  a  righl  to  a  proportional  part  in  the 
property  of  tin*  company's  asset-. 

Article  18.  Every  share  is  indivisible;  the  company  will  recognize 
but  one  owner  for  each  share. 

Article  L9.  The  rights  and  obligations  attached  to  a  share  follow 
the  certificate  held  in  any  hand. 

The  possession  of  a  share  carries  with  it  full  right  of  adhesion  to  the 
by  laws  or  the  company  and  to  the  resolutions  of  the  general  meeting 
of  the  stockholders. 

Article  20.  The  heirs  or  creditors  of  a  stockholder  under  any  pre- 
text whatever  can  not  cause  the  affixing  of  seals  upon  the  real  estate, 
the  values,  or  revenue  of  the  company,  nor  ask  for  their  division  or 
their  public  sale,  nor  to  interfere  in  any  manner  in  its  management. 
The}T  shall  for  the  exercise  of  their  rights  rely  upon  the  company's 
inventories  and  the  annual  account  approved  by  the  general  meeting 
of  the  stockholders. 

Article  21.  The  stockholders  shall  be  responsible  only  to  the  amount 
of  the  capital  of  their  shares  beyond  which  any  call  for  funds  is 
prohibited. 

Title  Third. — Council  of  administration. 

Article  22.  The  company  will  be  managed  by  a  council  of  eighteen 
members  at  least  and  twenty-four  members  at  most,  taken  from  among 
the  shareholders. 

A  committee  selected  from  its  midst  will  be  specialty  charged  with 
the  management  of  the  business  of  the  company. 

Article  23.  Owing  to  their  functions  the  administrators  shall  not 
contract  an}'  personal  or  joint  obligations;  they  are  only  liable  for 
the  execution  of  their  duties. 

Article  24.  The  administrators  shall  be  appointed  by  the  general 
meeting  of  stockholders. 

How  ever,  the  first  council  of  administration  shall  be  composed  of 
twenty-four  persons,  of  whom  the  names  are  following  and  who  shall 


PANAMA.  CANAL  TITLE. 


183 


accept  such  functions  of  administrator  before  the  final  completion  of 
the  company,  viz: 

Ferdinand  de  Lesseps,  presiding  manager  of  the  Suez  Canal  Com- 
pany; Allavene,  Charles  Francois  Hubert,  retired  general;  DeCicourt, 
Anne  Marie  Joseph  Albert;  Charles  Cousin,  principal  inspector  repre- 
sentative of  the  Northern  Railways;  Daubree,  Jean  Basptiste Emman- 
uel, administrator  in  the  Suez  Canal  Company;  Marius  Fontana,  general 
secretary  of  Suez  Canal  Company;  Delagarde,  Harel,  Jules  llerbette, 
Max  Hellman,  of  the  firm  of  Seligman  Freres  et  Cic. ;  Baron  Jules  de 
Lesseps,  administrator  of  the  Suez  Canal  Company;  Charles  Aime  de 
Lesseps,  administrator  of  the  Suez  Canal  Company;  Victor  de  Lesseps, 
administrator  of  the  Suez  Canal  Company;  De  Mondesir,  Paul  Antoine 
Theodore,  administrator  of  the  Suez  Canal  Company;  Monet-Bey, 
Theodore  Antoine,  administrator  of  the  Suez  Canal  Company;  Mou- 
rette,  Edme  Constant  Charles  Vincent,  administrator  of  the  Suez  Canal 
Company;  Theodore  Motet,  Adolph  Peghoux,  administrator  of  the 
Suez  Canal  Company;  Baron  Poisson,  administrator  of  the  Compan}^ 
of  Deposits  and  Accounts  Current;  Ernest  Prevost,  Piat,  William 
Seligman,  of  the  firm  of  Seligman  Freres  et  Cie. ;  General  Etienne 
Turr,  Dauprat,  Louis  Jules  Eugene,  administrator  of  the  Suez  Canal 
Compan}\ 

This  first  council  is  appointed  for  three  years;  the  appointment  will 
not  be  submitted  to  the  general  meeting  for  organizing  the  company. 
At  the  end  of  the  three  first  years  it  will  be  in  whole  submitted  to  a 
reelection. 

Article  25.  Commencing  from  this  time  the  administrators  shall  be 
appointed  by  the  general  meeting  of  the  shareholders  for  six  years  at 
the  utmost. 

Consequently  so  long  as  the  council  will  be  composed  of  eighteen  or 
twenty-four  members  it  shall  be  renewed  every  year  by  one-sixth 
until  the  entire  renewal  of  the  council  has  decided  the  order  of  rota- 
tion. The  outgoing  members  will  be  selected  annually  by  drawing 
lots. 

The  outgoing  administrators  may  be  reelected. 

If  the  number  of  administrators  selected  by  the  general  meeting 
should  become  less  than  twenty-four  and  above  eighteen,  the  general 
meeting  which  would  thus  decide  the  number  of  administrators  shall 
have  to  determine  the  manner  of  their  renewal  and  the  duration  of 
their  functions. 

Article  26.  In  case  of  vacancy  arising  from  resignation  or  death 
temporary  provision  shall  be  made  for  the  vacancy  to  be  filled  by  the 
council  of  administration  up  to  the  time  of  the  next  general  meeting 
of  the  stockholders. 

The  administrators  thus  selected  shall  only  remain  in  power  during 
the  time  remaining  of  the  period  of  their  predecessors. 

The  first  council  appointed  as  above  under  article  24  during  the  time 
of  its  function  shall  have  the  faculty  to  complete  or  to  renew  itself,  if 
need  be,  up  to  the  number  of  twenty-four  members,  subject  to  con- 
firmation by  the  next  general  meeting. 

It  is  well  understood  that  the  latter  members  shall  only  remain  in 
power  up  to  the  expiration  of  the  third  financial  year. 

Article  27.  Each  administrator  must  be  the  owner  of  one  hundred 
shares,  nominatives,  unalienable,  stamped  with  a  seal  showing  their 
unalienability,  and  they  shall  remain  in  the  hands  of  the  company  dur- 
ing the  whole  time  of  his  functions. 


184 


PANAMA   CANAL  TITLE. 


These  shares  are  pledged  as  a  guarantee  for  all  acts  daring  the  man- 
agement, even  of  sueh  as  would  be  exclusively  personal  fco  one  of  the 
administrators. 

Article  28.  A  share  of  three  per  cent  in  the  net  annual  profits  -hull 
be  allowed  to  the  administrators  on  account  to  their  trouble  and  care 
under  the  reservations  mentioned  in  article  60  hereafter. 

During  the  time  of  the  work  and.  if  need  he,  during  the  first  years 
following  the  opening  of  the  maritime  canal  to  Large  navigation,  there 
shall  be  allowed  to  the  administrators  in  place  of  the  3  per  cenl  stipu- 
lated hereabove,  an  annual  allowance  which  shall  he  included  in  the 
expenses  of  management,  the  amount  of  which  shall  be  fixed  by 
the  second  general  meeting  of  the  stockholders  who  organized  the 
company. 

The  council  of  administration  shall  decide  the  special  allowance 
which  is  to  he  made  to  the  members  of  the  committee  out  of  this  sum 
or  from  the  three  per  cent  of  profits. 

Articlk  '2(J.  The  council  of  administration  will  elect  each  year  from 
among  its  members  one  president  and  three  vice-presidents. 

The  president  and  vice-presidents  can  always  he  reelected. 

In  case  of  absence  of  the  president  and  the  vice-presidents,  the 
council  will  designate  at  each  meeting  which  of  its  members  shall  till 
the  position. 

Article  30.  The  council  of  administration  will  meet  at  least  once  a 
month.  It  shall  also  meet  upon  the  call  of  the  president  as  often  as  the 
interest  of  the  company  may  require. 

The  decisions  shall  be  adopted  by  a  majority  of  the  mem  hers  present. 

In  case  of  a  tie  the  vote  of  the  president  will  be  the  casting  vote. 

At  least  seven  administrators  snail  be  present  to  validate  the  reso- 
lutions of  the  council. 

When  seven  administrators  only  are  present,  the  resolutions  to  be 
valid  shall  be  carried  by  a  majority  of  live  votes. 

None  can  vote  in  the  council  by  proxy. 

Article  31.  The  general  secretary  of  the  company  shall  be  present 
at  the  meeting  of  the  council  of  administration,  with  the  privilege  of 
consultation. 

Article  32.  The  decisions  of  the  council  of  administration  shall  be 
recorded  in  minutes  signed  by  the  president  and  a  member  present  at 
the  meeting. 

The  copies  or  extracts  of  the  minutes  to  be  valid  at  law  or  elsewmere 
should  be  certified  by  two  administrators. 

Article  33.  The  council  of  administration  shall  have  the  utmost 
powers  to  insure  the  construction  of  the  canal,  for  the  management  of 
the  company,  and  for  the  choice  and  exploitation  of  the  domainal  lands 
ceded  by  paragraphs  7  and  8  of  article  1.  and  by  article  -i  of  the  law 
of  concession. 

They  may  ask  for  all  new  concessions,  make  agreements  with  third 
parties  for  the  purchase  of  concerns  or  of  concessions  having  relation 
to  any  of  the  purposes  of  the  company. 

They  will  fix  the  rules  of  order  of  the  general  meetings;  they  shall 
examine  the  accounts  submitted  to  the  general  meeting;  the}7  shall 
make  a  report  to  the  general  meeting  upon  the  accounts  and  the  state 
of  the  business  of  the  company. 

They  shall  fix  the  dividends  temporarily,  and  determine,  if  need  be, 
the  advances  to  be  paid  on  January  1st  upon  the  dividend  of  the  period 
closed  by  the  inventory  of  June  30th  preceding. 


PANAMA   CANAL  TITLE. 


W) 


They  shall  decide  upon  the  propositions  of  the  committee  concern- 
ing the  following,  viz: 

First.  Call  for  cash  from  stockholders. 

Second.  Temporary  investment  of  funds  on  hand. 

Third.  Surveys  and  schemes,  plans  and  estimates  for  carrying  out 
the  work. 

Fourth.  Contracts  by  the  job. 

Fifth.  Purchases,  sales,  and  exchanges  of  personal  property  and  real 
estate,  purchase  of  ships  or  machinery  necessary  for  the  execution 
of  the  work  and  the  management  of  the  enterprise. 

Sixth.  Annual  budgets. 

Seventh.  Fixing  and  modifying  rights  of  all  nature  to  be  received 
in  virtue  of  the  concession,  the  conditions,  and  mode  of  collecting  tolls. 
Eighth.  Disposal  of  the  reserve  funds. 

Ninth.  Disposal  of  the  funds  for  pensions,  help,  and  encouragement 
of  the  employes. 

Tenth.  Regulations  for  deposits  of  the  shares  and  bonds  of  the  com- 
pany. 

And  generally  shall  do  for  the  best  interest  of  the  company  all  that 
they  may  deem  useful  or  necessary. 

Article  34.  The  council  shall  appoint  from  its  members  those  who 
are  to  be  a  part  of  the  committee. 

They  may  delegate  to  one  or  several  administrators,  to  officers, 
employes  of  the  company,  or  to  others,  part  or  all  of  their  power  by 
special  authority  for  one  or  more  transactions  or  determined  purposes. 

Title  Fourth. —  Com  m  itta  > . 

Article  35.  The  committee  shall  be  composed  of  the  president  of 
the  council  of  administration  and  six  members  at  the  most  of  the  council 
of  administration. 

The  powers  of  members  of  the  committee  will  last  for  the  same 
period  as  those  they  possess  as  members  of  the  council  of  administration. 

Article  36.  The  committee  will  meet  as  often  as  necessary  for  the 
good  management  of  the  business  and  at  least  once  a  week. 

In  order  to  make  its  work  valid  there  shall  be  at  least  three  members 
present. 

All  resolutions  shall  be  adopted  by  a  majority  of  the  members 
present. 

In  case  of  a  tie,  the  vote  of  the  president  of  the  council,  if  present, 
shall  be  the  casting  vote. 

Article  37.  Minutes  of  the  meeting  of  the  committee  shall  be 
kept.  These  minutes  shall  be  signed  by  two  members  present  at  the 
meeting. 

The  extracts  from  such  minutes  to  be  valid  in  courts  or  elsewhere 
shall  be  certified  to  by  two  members  of  the  committee. 

Article  38.  The  committee  shall  have  full  power  for  the  manage- 
ment of  the  business  of  the  company. 

They  shall  provide  for  the  execution  of  the  obligations  imposed  by 
the  law  of  concession  and  the  by-laws,  as  also  for  the  resolutions 
adopted  by  the  general  meeting  and  the  decisions  of  the  council  of 
administration. 

Thev  shall  submit  to  the  council  of  administration  propositions 
relating  to  the  purposes  defined  in  article  33. 


180 


PANAMA   CANAL  TITLE. 


They  shall  represent  the  company  and  shall  act  in  its  name  by  one 
or  more  of  its  members  in  all  cases  where  a  special  decision  docs  not 
require  the  intervention  of  the  general  meeting  of  (lie  stockholders  or 
of  the  council  of  administration.  They  especially  shall  dismiss  employes, 
determine  their  functions  and  attributes,  fix  their  compensation  and 
gratuities. 

They  shall  regulate  the  work  of  the  offices,  prescribe  the  regulat  ions 
and  order  of  business,  and  will  order  and  regulate  expenses.  They 
shall  sign  all  correspondence,  all  notes,  endorsements,  contracts,  drafts, 
transfer  of  "  rentes,"  public  securities,  and  values  belonging  to  the 
company. 

They  shall  decide  upon  all  bargains,  agreements,  except  contracts  by 
the  job  for  the  whole  of  the  work;  they  will  authorize  awards;  make 
all  purchases  of  furniture;  authorize  all  rentals  and  leases. 

They  will  attend  to  the  collection  of  tolls,  the  recovery  of  all  moneys 
due,  will  sign  all  receipts  and  discharges;  they  will  decide  all  with- 
drawals of  mortgages,  seizure,  injunctions,  and  other  hindrances,  with 
all  abandonments  of  privilege,  of  mortgages  or  action  for  cancellation, 
the  whole  before  or  after  payment. 

They  may  agree,  compound,  compromise,  plead  as  prosecutor  or 
defendant,  but  judiciary  proceedings  are  to  be  directed  by  or  against 
the  president  of  the  council  of  administration. 

In  consequence  the  legal  notices  shall  be  served  and  received  by  the 
president  of  the  council  at  the  company's  office. 

The  decisions  of  -the  committee,  the  acts  and  agreements  approved 
by  them,  shall  be  signed  by  the  president  or  by  one  of  the  members 
of  the  committee  designated  for  that  purpose. 

Article  39.  The  committee  by  authenticated  power  of  attorney 
can  delegate  to  one  or  more  administrators,  to  officers  of  the  company, 
employees,  or  others  the  power  to  sign  all  acts  and  agreements  men- 
tioned hereabove. 

Title  Fifth . — Commissaires. 

Article  40.  The  general  meeting  of  the  stockholders  shall  appoint 
one  or  more  commissaires,  together  or  separately,  invested  with  the 
functions  which  devolve  upon  them  by  law. 

In  case  of  absence  of  one  of  the  commissaires  the  one  or  those  who 
remain  will  proceed  by  themselves. 

Title  Sixth. — General  meetings  of  stockholders. 

Article  41.  A  general  meeting  regularly  organized  shall  represent 
the  universality  of  all  the  shareholders. 

Article  42.  The  general  meeting  shall  be  composed  of  all  stock- 
nolders,  owners  of  at  least  twenty  shares. 

It  will  be  regularly  organized  when  the  stockholders  present  will 
represent  one-quarter  of  the  capital. 

Article  43.  If  upon  a  first  call  the  stockholders  do  not  fill  the  con 
ditions  specified  hereabove  to  validate  the  resolutions  of  the  general 
meeting,  the  meeting  by  right  shall  be  adjourned  and  the  adjournment 
shall  not  be  less  than  a  month. 

A  second  call  shall  be  made  in  the  manner  prescribed  by  article  45 
hereafter. 


PANAMA  CANAL  TITLE. 


187 


The  resolutions  of  the  genera]  meeting  of  this  second  call  shall  only 
hoar  upon  questions  of  the  proceedings  of  the  first  meeting;  such  reso- 
lutions will  be  valid  w  hatever  the  proportion  of  capital  represented  by 
the  stockholders  may  he. 

Article  44.  The  general  meeting  shall  be  held  each  year  and  day  and 
at  the  place  designated  by  the  council  of  administration  before  June  30. 

There  will  bean  extraordinary  meeting  besides  as  often  as  the  council 
of  administration  shall  deem  it  advisable. 

Article  45.  The  ordinary  and  extraordinary* calls  are  made  by  means 
of  a  notice  inserted  at  least  one  month  in  advance  in  one  of  the  Paris 
newspapers  designated  for  receiving  legal  notices,  and  also  in  all  other 
foreign  papers  designated  by  the  council  of  administration. 

Article  46.  Stockholders  in  order  to  have  the  right  to  attend  or  to 
be  represented  at  the  general  meeting  shall  have  to  show  proof  at  the 
office  of  the  company  at  least  five  days  before  the  meeting  that  they 
have  deposited  their  certificates  at  the  company's  office,  or  at  the  office 
of  a  representative  of  the  company  designated  for  that  purpose  by  the 
council  of  administration. 

Deposits  made  under  such  conditions  shall  give  the  right  for  nomi- 
native card  of  admission. 

Stockholders  of  nominative  certificates  or  certificates  of  deposit  have 
also  the  privilege  to  be  represented  at  general  meetings  by  proxies 
having  regular  power,  the  form  of  which  shall  be  determined  by  the 
council  of  administration. 

The  proxies  shall  deposit  their  power  of  attorney  at  the  office  of  the 
company  within  a  time  to  be  fixed  by  the  council  of  administration  for 
each  meeting. 

No  one  can  act  as  proxy  for  a  stockholder  unless  he  is  himself  a 
member  of  the  meeting. 

Article  47.  The  general  meeting  shall  be  presided  by  the  president 
or  one  of  the  vice-presidents  of  the  council  of  administration,  and  in 
their  absence,  by  an  administrator  selected  by  the  council. 

The  two  largest  stockholders  present  at  the  time  of  the  opening  of 
the  meeting,  and  who  will  accept,  shall  be  appointed  as  scrutators. 

The  president  shall  appoint  the  secretary. 

Article  48.  The  resolutions  at  general  meetings  shall  be  adopted  hy 
a  majority  of  votes  of  the  members  present  or  regularly  represented. 

In  case  of  a  tie  the  vote  of  the  president  shall  be  the  casting  vote. 

Article  49.  Twenty  shares  give  the  right  to  one  vote,  but  the  same 
stockholder  can  not  possess  more  than  ten  votes,  either  as  shareholder 
or  as  proxy. 

Article  50.  Secret  ballots  may  be  requested  by  ten  members. 

Article  51.  The  resolutions  of  the  general  meetings  shall  be 
recorded  in  minutes  signed  by  the  president,  by  the  scrutators,  and  by 
the  secretary. 

The  copies  or  extracts  of  these  minutes  in  order  to  be  valid  before 
courts  of  justice  or  elsewhere  shall  be  certified  by  two  administrators. 

Article  52.  In  each  general  meeting  a  tally  sheet  of  those  present 
shall  be  kept.  It  shall  contain  the  names  and  residences  of  the  share- 
holders and  the  number  of  shares  held  by  each.  This  sheet  shall  be 
certified  by  the  officers  of  the  meeting  and  shall  remain  at  the  office  of 
the  company. 

Article  53.  The  order  of  business  of  the  meeting  shall  be  decided 
by  the  council  of  administration. 


188 


PANAMA    (ANAL  TITLE. 


No  other  question  than  that  mentioned  in  the  order  of  business  shall 
be  discussed. 

Article  54.  The  general  meeting  will  receive  the  report  of  the  coun- 
cil of  administration  upon  the  company's  business. 

The  report  of  the  commissaires  shall  also  he  read  upon  the  situation 
of  the  company  and  upon  the  condition  and  of  the  accounts  presented 
by  the  council  of  administration. 

The  accounts  shall  be  discussed  and  if  need  be  shall  be  approved. 

The  dividends  to  declare  shall  be  decided. 

Vacancies  of  administrators  and  commissaires  shall  be  lilled. 

A  vote  shall  be  taken,  if  need  be,  for  the  increase  of  the  company's 
capital  up  to  the  amount  of  ?>()()  millions,  and  for  carryingit,  if  need  be, 
to  the  amount  of  600  millions. 

Such  increase  of  capital  shall  not  be  made  unless  the  first  stockholders 
are  given  the  right  of  preference. 

All  loans  by  means  of  issues  of  bonds  or  by  means  of  mortgages  or 
by  any  other  means  shall  be  voted  for. 

Accounts  for  first  installation  shall  be  settled  after  the  execution  of 
the  work.  Meetings  shall  decide  upon  propositions  made  by  the  council 
of  administration. 

They  shall  consider  and  decide  sovereignly  upon  all  the  interest  of 
the  company,  and  shall  confer  all  supplementary  useful  powers  needed 
upon  the  council  of  administration. 

Article  55.  The  resolutions  of  a  general  meeting  adopted  accord- 
ing to  the  by-laws  bind  all  stockholders,  even  such  as  are  absent  or 
disagreeing. 

Title  Seventh. — Statement  of  finances — Inventor;/. 

Article  56.  The  financial  year  will  commence  Jul}7  1st  and  end 
June  30th. 

The  first  statement  of  receipts  and  expenditures  will  include  the 
time  between  the  final  organization  of  the  company  and  the  following 
June  30th. 

Article  57.  The  council  of  administration  shall  make  every  quarter 
a  summary  statement  of  the  resources  and  liabilities  of  the  company. 

This  statement  to  be  accessible  to  the  commissaires. 

There  shall  be  made  up,  moreover,  at  the  end  of  each  financial  }rear 
an  inventory  showing  the  value  of  assets  and  liabilities  and  all  the 
active  and  passive  debts  of  the  company. 

Such  inventory  to  be  reported  to  the  general  meeting. 

Title  Eighth.  — Annual  accounts — Redemption — Interest  —  Reserve 

fund — D  w  idends. 

Article  58.  During  the  execution  of  the  work  there  shall  be  paid 
to  the  stockholders  annually  interest  at  5  per  cent  upon  the  amount 
paid  by  them  in  conformity  with  article  9  here  above. 

Payment  for  such  interest  shall  be  provided  for  by  temporary 
investments  of  funds  and  other  accessories  and,  if  need  be,  by  the 
company's  capital. 

Article  59.  The  annual  revenues  of  the  company  shall  first  be  used 
for  cancelling  the  part  stipulated  for  its  benefit  to  the  United  States 
of  Colombia  according  to  terms  of  the  law  of  concession;  the  expenses 


PANAMA   CANAL  TITLE. 


189 


of  exploitation  and  care  taking;  the  expenses  for  office  management 
and  generally  for  all  charges;  the  interest  and  redemption  of  loans 
which  may  nave  been  contracted;  four-hundredths  per  cent  of  the 
capital  applicable  to  the  redemption  fund  as  created  by  article  63 
hereafter;  the  allotment  of  one-twentieth  upon  the  profits,  after  the 
satisfaction  of  all  the  charges  here  above  enumerated,  for  the  creation 
of  a  reserve  fund;  the  excess  of  the  annual  revenues,  the  net  revenues 
or  profits  of  the  company  to  be  divided. 

Article  60.  The  net  revenues  or  profits  of  the  company  are  to  be 
divided  in  the  following  manner: 

To  the  shares  up  to  amount  of  5  per  100  of  their  capital  by  allot- 
ment, excepting,  however,  what  will  be  stated  hereafter  concerning 
redeemed  shares. 

The  remainder  after  this  allotment  will  be  divided  at  the  rate  of: 

80  per  100  to  shares. 

15  per  100  to  founders  or  beneficiaries  mentioned  under  article  7 
hereabove. 

3  per  100  to  administrators. 

And  2  per  100  for  the  creation  of  a  fund  to  provide  for  pensions, 
help,  indemnity,  or  gratuities  granted  by  the  council  of  administration 
to  employes. 

The  redeemed  shares  shall  only  have  a  right  to  the  part  of  the  divi- 
dend exceeding  5  per  100  of  the  capital  reimbursed  on  them;  all  that 
will  represent  interest  at  5  per  100  of  the  capital  reimbursed  shall  be 
paid  to  the  redemption  fund,  which  will  be  mentioned  in  article  63 
hereafter. 

Article  61.  The  payment  of  interest  and  dividend  shall  be  made  to 
the  company's  treasurer  or  to  the  representatives  designated  by  the 
council  of  administration. 

The  payment  of  interest  is  to  be  made  in  two  periods — the  1st  of 
January  and  the  1st  of  July  of  each  }^ear. 

The  dividend  shall  be  paid  on  the  1st  ofvJuly  which  will  follow  the 
vote  of  the  annual  general  meeting. 

However,  the  administrators  when  they  ma}T  judge  it  deemable  may 
authorize  a  payment  on  account  of  the  dividend  on  the  1st  of  January 
preceding. 

Article  62.  The  dividends  and  interest  unclaimed  at  the  expiration 
,of  five  years  after  the  time  for  payment  shall  be  forfeited  to  the 
company. 

Article  63.  The  redemption  of  the  shares  shall  be  accomplished  in 
ninety-nine  years,  to  begin  from  the  starting  point  of  the  concession. 

Provision  is  made  for  this  redemption  as  mentioned  in  articles  59 
and  60  hereabove  by  means  of  an  annuit}T  of  four  hundredths  per  cent 
of  the  company's  capital  and  by-  the  sums  retained  from  the  dividends 
of  redeemed  snares. 

The  shares  to  be  reimbursed  shall  be  designated  by  means  of  draw- 
ing lots  in  public  each  }Tear  at  the  office  of  the  company  at  the  time 
and  according  to  the  regulations  made  by  the  council. 

Article  64.  The  numbers  of  shares  drawn  to  be  reimbursed  shall 
be  posted  at  the  office  of  the  company. 

Article  65.  The  reimbursement  of  the  shares  drawn  to  be  redeemed 
shall  be  made  at  the  place  selected  for  the  payment  of  interest  and 
dividends. 

The  holders  of  redeemed  shares  shall  possess  all  the  same  rights  as 


1 90 


PANAMA   CANAL  TITLE. 


the  holders  of  shares  unredeemed,  with  the  exception  of  the  portion  of 
the  dividend  representing  interest  at  5  per  LOO  of  the  capital  which 
has  been  reimbursed  to  them. 

Article  66.  The  part  allotted  to  the  founders  or  beneficiaries,  desig- 
nated in  article  7  hereabove,  from  the  annual  profits  of  the  company 
shall  l>e  represented  by  special  certificates,  the  nature  and  style  of 
which  shall  be  determined  by  the  council  of  administration. 

In  all  cases  the  provisions  of  articles  18  and  1 9  hereabove  concerning 
shares  are  equally  applicable  to  the  certificate-  of  founder-  or  benefi- 
ciaries. 

Article  <>7.  The  reserve  fund  shall  consist  of  accumulation-  of 
money  withdrawn  from  the  annual  profits  in  conformity  to  article  59 
hereabove,  and  is  set  aside  to  meet  extraordinary  and  unforeseen 
expenses. 

When  this  reserve  fund  shall  attain  one-tenth  of  the  capital  the  allot- 
ment intended  for  its  creation  shall  cease  to  be  applied  and  shall  be 
added  to  the  dividends  to  be  divided. 

In  case  of  insufficiency  of  the  results  in  one  year  to  allow  5  per  100 
per  share  the  difference  may  be  drawn  from  the  reserve  fund. 

Title  Ninth. — Changes  in  by-lav)s — Liquidation. 

Article  68.  If  experience  should  show  the  usefulness  of  making 
modifications  or  additions  to  the  present  by-laws  the  general  meeting 
shall  proceed  to  make  them  in  the  manner  determined  by  articles  69 
and  7<»  hereafter. 

The  meeting  can  especially  decide  upon — 

The  reduction  of  the  company's  capital  or  its  increase  beyond  600 
millions. 

The  extension  or  the  dissolution  of  the  company. 
Consolidation  with  other  companies. 

All  modifications  bearing  upon  the  company's  object  can  be  made 
without,  however,  altering  it  in  its  essence. 

Article  69.  The  general  meetings  called  to  deliberate  upon  the  sun- 
dry purposes  named  in  the  preceding  article  shall  not  be  regularly 
organized  and  their  resolutions  shall  only  be  valid  when  they  are  com- 
posed of  a  number  of  stockholders  representing  at  least  one-half  of  the 
capital.  But  then  the  council  of  administration  shall  have  the  right, 
in  its  calls,  to  decrease  as  much  as  it  may  deem  useful  the  number  of 
shares  held,  which  shall  be  sufficient  for  taking  part  in  the  general 
meetings;  and  in  such  a  case  the  holder  of  a  minimum  number  of  shares 
sufficient  to  be  admitted  to  the  meeting  shall  have  the  right  to  one 
vote,  the  holder  of  ten  shares  shall  have  a  right  to  two  votes,  and  the 
number  of  votes  will  increase  at  the  rate  of  one  vote  for  each  ten  shares, 
whilst  the  total  number  of  votes  for  each  holder  can  not  be  above  ten. 

Article  TO.  It  is  hereby  explained  that  it  is  to  conform  to  the 
French  law  now  in  force  that  the  present  by-laws  require  the  repre- 
sentation of  one-half  the  company's  capital  in  the  general  meetings 
relating  to  purposes  specified  in  article  68  hereabove  and  the  represen- 
tation one  one-quarter  of  the  capital  in  the  other  general  meetings. 

But  it  is  positively  understood  that  the  company  would  enjoy  all 
benefits  derived  from  all  new  laws  which  should  decrease  the  amount 
of  capital  necessary  to  be  represented  in  the  general  meetings  and  that 
all  new  legislative  provisions  touching  upon  this  question  will  become 
applicable  to  the  company  created  by  these  present  upon  a  conform 


PANAMA   CANAL  TITLE. 


191 


resolution  of  a  general  meeting  called  according  to  the  regulations 
prescribed  by  articles  42  and  4o  heivabove. 

Article  71.  In  ca.se  of  dissolution  of  the  company  upon  a  proposi- 
tion of  the  council  of  administration,  the  general  meeting  will  deter- 
mine the  mode  to  be  adopted  either  for  dissolution  or  for  the  organiza- 
tion of  a  new  company.  One  or  more  liquidators  shall  be  appointed, 
and  the  most  extensive  power  may  be  granted  to  them. 

Article  During  the  liquidation  the  power  of  the  general  meet- 
ings will  continue  as  during  the  existence  of  the  company. 

They  have  especially  the  right  to  approve  the  accounts  of  the  liqui- 
dator and  give  receipt  therefor. 

The  appointment  of  liquidators  will  terminate  the  power>  of  the 
administrators  and  of  all  proxies. 

Title  Tenth. — Competency  of  jurisdiction — Controversies. 

Article  73.  In  conformity  with  article  20  of  the  law  of  concession, 
the  differences  which  may  arise  between  the  Government  of  the  United 
States  of  Colombia  and  the  company  shall  be  submitted  to  the  federal 
supreme  court. 

But  for  all  other  controversies  the  company  has  its  domicile  in  Paris. 

Article  74.  Controversies  bearing  upon  the  general  and  collective 
interest  of  the  company  can  not  be  brought  either  against  the  council 
of  administration  or  against  one  of  its  member.-,  except  in  the  names 
of  stockholders  representing  at  least  one-twentieth  of  the  capital  of 
the  company.  The  social  initiative  can  not  belong  to  a  stockholder  or 
to  a  group  of  stockholders  representing  less  than  one-twentieth  of  the 
capital. 

And  no  action  at  law  brought  by  one  or  more  stockholders  against  the 
company,  its  council  of  administration,  or  one  of  its  members  can  be 
referred  to  any  tribunal  until  after  it  has  been  examined  by  the  general 
meeting  of  the  stockholders,  the  opinion  of  which  will  be  submitted 
to  the  magistrates  at  the  same  time  as  the  reque>t  it-elf. 

Article  75.  In  cases  of  controversies  all  stockholders  shall  select  a 
domicile  in  Paris  and  all  notices  and  summons  will  be  validly  served 
to  the  domicile  by  him  so  selected  without  regard  to  his  real  domicile. 

Failing  to  select  a  domicile  such  an  election  shall  take  place  with  full 
right  for  judicial  or  extra  judicial  notices  to  the  office  of  the  procurator 
of  the  Republic  at  the  civil  tribunal  of  first  instance  of  the  Seine. 

Domicile  being  selected  formally  or  implicitly,  as  has  been  mentioned, 
will  carry  with  it  the  competency  of  jurisdiction  of  the  tribunals  of 
the  Department  of  the  Seine. 

Article  76.  In  all  controversies  which  may  ari>e  between  the  com- 
pany and  third  parties  all  judicial  or  extra  judicial  actions  must  of 
necessity  be  served  legally  upon  the  company  by  a  single  copy  in  the 
person  of  the  president  of  the  council  of  administration  and  at  the 
office  of  the  company. 

Title  Eleventh. — Transitory  provisions. 

Article  77.  The  subscription  of  the  company's  entire  capital  and 
the  payment  of  at  least  one-quarter  of  the  capital  in  specie  shall  be 
announced  by  a  declaration  of  Mr.  Ferdinand  de  Lesseps,  made  by  a 
notarial  act. 

To  this  declaration  is  to  be  annexed  the  list  of  subscribers  and  the 
statement  of  the  instalments  paid. 


192 


PANAMA  CANAL  TITLE. 


Article  78.  Such  a  declaration  with  its  vouchers  shall  be  submit  led 
at  the  first  regular  meeting,  when  its  correctness  shall  be  certified  to. 

At  the  same  meeting  the  value  of  the  acquisitions  stated  above  shall 
be  verified  and  also  the  cause  of  the  stipulated  advantages. 

Article  79.  A  second  meeting  shall  take  place  to  approve,  if  need 
be,  the  acquisitions  and  advantages  alluded  to. 

This  same  meeting  for  the  first  period. of  receipts  and  expenditures 
shall  appoint  commissaires  as  created  by  article  40. 

The  minutes  of  the  meeting  will  state  the  acceptance  of  the  adminis- 
trators and  commissaires  if  they  are  present  at  the  meeting. 

The  company  shall  be  organized  from  the  time  of  their  acceptance. 

Article  80.  The  general  meetings  held  for  the  creation  of  the  com- 
pany shall  be  composed  of  all  the  subscribe""  voting  vwa  voce,  except 
that  the  bearers  of  several  shares  are  to  have  a  vote  for  each  ten  shares, 
but  not  to  have  more  than  ten  votes. 

The  organizing  meeting  shall  be  composed  of  a  number  of  stock- 
holders representing  at  least  one-half  of  the  capital.  The  company's 
capital,  one-half  of  which  must  be  represented  for  a  verification  of  the 
acquisitions,  shall  be  composed  onty  of  the  acquisitions  not  submitted 
to  verification. 

If  the  general  meeting  is  not  composed  of  a  number  of  stockholders 
representing'  one-half  of  the  company's  capital,  none  but  temporaiy 
resolutions  can  be  adopted.  In  such  a  case  a  new  general  meeting 
shall  be  called.  Two  notices,  published  at  an  interval  of  eight  days,  at 
least  one  month  in  advance,  in  one  of  the  Paris  newspapers  for  legal 
notices,  shall  acquaint  the  stockholders  of  the  temporary  resolutions 
adopted  by  the  first  meeting,  and  such  resolutions  shall  become  final 
if  they  are  approved  by  the  new  meeting  composed  of  a  number  of 
stockholders  representing  one-fifth  at  least  of  the  capital. 

Article  81.  All  the  stipulations  of  Title  VI  relative  to  general  meet- 
ings and  conci liable  with  those  contained  under  the  present  title  are 
applicable  to  organizing  general  meetings. 

Article  82.  The  sum  of  300  millions  proposed  by  the  proponent 
under  article  8  of  the  present  scheme  for  a  company  to  be  the  amount 
of  the  company's  funds  is  thus  fixed  temporarily  and  as  a  basis  for  the 


Consequently  if  this  amount  is  not  subscribed  in  whole,  the  sub- 
scribers shall  be  notified  for  a  preparatory  meeting  to  determine  if  the 
purpose  of  the  company  can  or  can  not  be  attained  with  the  capital 
obtained  by  the  subscription,  and,  in  case  of  the  affirmative,  to  fix  in  a  defi- 
nite and  irrevocable  manner  the  amount  of  the  capital  of  the  company. 

To  be  valid  such  a  decision  should  be  adopted  in  accord  with  Mr. 
Ferdinand  de  Lesseps. 

The  subscribers  present  must  then  represent  one-half  of  the  capital 
subscribed  and  voting  shall  take  place  by  the  majority  of  subscribers 
present  voting  viva  voce. 

The  capital  being  thus  fixed  the  formalities  for  organization  enumer- 
ated in  the  preceding  articles  shall  then  be  gone  into. 


Article  83.  During  the  month  of  the  organization  of  the  company 
the  administrators  will  deposit  at  the  office  of  the  tribunal  of  com- 
merce of  the  Seine  and  of  justice  of  the  peace  of  the  first  district  of 
Paris: 


Title  Twelfth. — Publication. 


PANAMA  CANAL  TITLE. 


193 


First.  A  copy  of  the  organization  of  the  company. 
Second.  A  copy  of  the  act  stating  the  subscription  of  the  capital  and 


Third.  A  certified  copy  of  the  resolutions  adopted  at  the  genera] 
meeting  in  virtue  of  the  articles  78  and  79  hereabove. 

Fourth.  A  certified  copy  of  the  nominative  list  of  the  subscribers, 
containing  their  names,  surnames,  their  business,  residences,  and  the 
number  of  shares  to  each. 

The  same  documents  shall  be  posted  up  in  a  conspicuous  manner  in 
the  offices  of  the  company. 

Article  84.  During  the  same  time  an  extract  of  the  acts  and  reso- 
lutions mentioned  in  the  preceding*  article  shall  be  inserted  in  one  of 
the  Paris  journals  for  legal  notices,  in  conformity  with  law. 

Article  85.  All  powers  shall  be  granted  to  the  bearer  of  the  papers 
for  the  deposit  and  publication  in  question. 

Article  86.  Finally  Mr.  Ferdinand  de  Lesseps  calls  attention  that 
all  the  stipulations  contained  in  the  two  last  preceding  titles  relative 
to  the  organization  and  to  the  publications  of  the  present  company 
have  only  been  dictated  owing  to  the  exigencies  of  the  French  law  for 
stock  companies  now  in  force. 

He  especially  reserves  the  benefits  of  all  new  enactments  that  may 
be  introduced  by  legislation  in  the  law  for  the  purpose  of  facilitating 
the  organization  of  such  large  enterprises. 


LAW  OF  JUNE  8,  1888  (FRANCE),  AUTHORIZING  THE  OLD  PANAMA 
CANAL  COMPANY  TO  ISSUE  LOTTERY  BONDS. 


LAW  AUTHORIZING   THE   COMPAGNIE    DU   CANAL   INTEROCEANIQUE  DE 
PANAMA  TO  ISSUE  SECURITIES  REPAYABLE  WITH  PRIZES. 

The  Senate  and  Chamber  of  Deputies  have  adopted,  and 
The  President  of  the  Republic  promulgates  a  law  of  the  following 
tenor: 

Article  1.  The  Compagnie  Universelle  du  Canal  Interoceanique  de 
Panama  is  authorized  to  create,  up  to  six  hundred  million  francs 
(600  000,000  fr.),  an  issue  of  bonds,  payable  with  prizes,  by  lot,  upo 
the  following  conditions: 

First.  The  bonds  issued  shall  bear  annual  interest,  the  rate  of 
which  can  not  be  less  than  3  per  cent  on  their  par  value. 

Second.  The  total  annual  sum  distributed  in  the  form  of  prizes  can 
not  in  any  case  exceed  1  per  cent  of  the  par  value. 

Third.  The  par  value  of  the  bonds  issued  can  not  be  less  than 
300  fr. ;  subsequent  division  of  the  bonds  issued  is  forbidden. 

Fourth.  The  payment  of  this  loan  in  a  period  of  99  years,  at  farthest, 
shall  be  secured  by  a  sufficient  deposit,  for  this  especial  purpose,  of 
French  Government  bonds,  or  of  securities  guaranteed  by  the  French 
Government.  The  Compagnie  Universelle  du  Canal  Interoceanique 
de  Panama,  to  meet  the  obligation  imposed  upon  it,  is  authorized  to 
increase,  under  the  same  conditions,  the  said  loan  of  600  millions  by 
the  sum  necessary  for  the  formation  of  this  guaranty  fund,  this  increase 


EXHIBIT  F. 


Paris,  June  £,  1888. 


8751—02- 


13 


194 


PANAMA   CANAL  TITLE. 


of  loan  not  to  exceed  twenty  per  cent  (20  per  cent)  of  the  par  of  the 
issue. 

Art.  2.  If  the  Compagnie  Universelle  du  Canal  lnteroceanique  de 
Panama  .should  hereafter  convert  all  or  any  part  of  its  former  obliga- 
tions, the  provisions  of  article  1  shall  be  applicable  to  the  new  securities 
created  by  means  of  this  conversion. 

Art.  3.  All  material  necessary  for  the  completion  of  the  works 
shall  be  manufactured  in  France. 

The  raw  material  must  be  of  French  origin. 

Art.  4.  All  prospectuses,  posters,  publications,  and  other  documents 
intended  for  advertising  must  bear,  in  type  of  the  same  size  as  that 
used  for  announcing  the  loan,  and  below  the  amount  of  the  loan,  the 
notice: 

"  Loan  authorized  in  conformity  with  the  provisions  of  the  law  of 
May  21st,  1836,  by  the  law  of  June  8th,  1888,  but  without  any  guaranty 
or  responsibility  of  the  State." 

The  same  notice  shall  be  put  at  the  top  of  the  temporary  or  perma- 
nent certificates  issued  to  subscribers. 

Any  violation  of  the  above  provision  will  entail  the  withdrawal  of 
authorization  by  simple  order  of  the  Minister  of  Finance. 

The  present  law.  considered  and  adopted  by  the  Senate  and  by  the 
Chamber  of  Deputies  shall  be  executed  as  a  law  of  the  State. 

Done  at  Paris,  June  8th,  1888. 

C  a  knot. 

By  the  President  of  the  Republic: 

The  Minister  of  Finance, 

P.  Peytral. 


EXHIBIT  G. 

JUDGMENT  OF  DECEMBER  15,  1888  (CIVIL  TRIBUNAL  OF  THE  SEINE), 
APPOINTING  PROVISIONAL  ADMINISTRATORS  OF  THE  OLD  PANAMA 
CANAL  COMPANY. 

[Taken  from  the  minutes  of  the  clerk's  office  of  the  civil  tribunal  of  the  first  instance,  department 
of  the  Seine,  sitting  at  the  palace  of  justice  at  Paris.] 

The  civil  tribunal  of  the  first  instance,  department  of  the  Seine,  sit- 
ting at  the  palace  of  justice  at  Paris,  has  rendered,  at  the  session  of 
the  chamber  of  the  council  of  said  tribunal,  the  following  judgment: 

Session  of  the  15th  of  December,  1888. 

The  tribunal,  met  in  the  chamber  of  the  council:  upon,  first,  the 
request  presented  by  Denormandie,  Baudelot.  and  Hue,  signed  Denor- 
mandie,  solicitor,  the  tenor  of  which  is  as  follows: 

To  the  president  and  judges  composing  the  chamber  of  council  of  the 
first  instance  of  the  Seine. 

Gentlemen:  MM.  Denormandie,  Baudelot,  and  Hue,  acting  in  the 
character  of  provisional  administrators  of  the  company  of  the  Inter- 
oceanic  Canal  of  Panama,  the  character  of  which  they  have  been  invested 
by  order  of  the  president  of  the  tribunal,  dated  the  14th  of  December 
of  the  present  month  recorded,  having  domicile  at  the  headquarters  of 
the  company.  4:6  Rue  Comartin,  at  Paris,  having  for  solicitor  Me.  Denor- 
mandie. have  the  honor  to  show  to  you  the  following: 

The  1-Jrth  of  December,  present  month,  an  order  was  made  by  the 
president  of  the  tribunal  in  the  following  terms,  upon  the  request  pre- 
sented by  the  Interoceanic  Canal  Company:  We,  the  president,  having 


PANAMA  CANAL  TITLE.  195 

seen  the  above  request,  appoint  MM.  Denormandie,  Baudelot,  and 
Hue  provisional  administrators  of  the  company  of  the  interoceanic 
canal,  with  powers  the  most  extensive  to  carry  on  and  administer  pro- 
visionally the  company,  and  especially  to  assure  the  continuation  of 
the  works,  and  to  do  these  things  they  are  authorized  to  contract  all 
loans,  constitute  all  pledges,  make  all  payments,  enter  into  all  agree- 
ments, sign  all  papers,  institute  all  judicial  proceedings,  or  defend  them, 
and  generally  to  do  all  acts  necessary  to  the  objects  of  their  mission, 
with  the  obligation  to  proceed  within  fifteen  days  before  the  chamber 
of  the  council.  We  order  the  provisional  execution  of  the  present 
ordinance,  even  before  its  being  recorded,  in  case  of  the  existence  of 
any  urgency.  Done  at  Paris,  in  the  palace  of  justice,  the  14th  of 
December.  L888. 

(Signed)  Aubepin. 

There  is  great  urgency  for  the  provisional  administrators  to  demand, 
in  conformity  with  the  ordinance  above  stated,  the  confirmation  of 
their  powers  by  the  president  and  judges  composing  the  chamber  of 
the  council,  asking  of  the  tribunal,  in  continuing  their  powers,  to 
authorize  them  to  sign  all  documents,  either  collectively  or  individu- 
ally; to  authorize  them,  besides,  to  delegate,  so  far  as  necessary,  all 
agents  and  engineers  and,  generally,  all  persons,  in  order  to  give  in 
the  name  of  the  provisional  administrators  all  signatures  or  fulfill  all 
or  part  of  the  mission  that  you  have  been  pleased  to  confer  upon  the 
appearers.  For  these  reasons,  to  pass  upon  the  powers  conferred 
upon  the  provisional  administrators  by  the  ordinance  of  the  14th  of 
December  confirming  them,  and  adding  the  power  to  sign  all  docu- 
ments whatsoever,  either  collectively  or  individually,  and  to  authorize 
them  to  delegate  for  the  accomplishment  of  their  mission,  and  to  sign 
in  their  name  all  documents  necessary  of  persons  as  may  be  deemed 
advisable.    And  this  will  be  right. 

(Signed)  Denormandie. 

Secondly.  The  ordinance  of  the  president  of  the  tribunal  providing: 
Let  this  be  communicated  to  the  attorney  of  the  Republic  in  order 
that,  after  his  conclusions  are  received,  and  upon  the  report  which 
will  be  made  by  M.  Bourgoin,  judge,  whom  we  commission,  it  may 
be  determined  as  may  be  proper. 

Done  at  the  palace  of  justice  the  15th  of  December,  1888. 

(Signed)  Masson. 

Thirdly.  The  conclusions  of  the  public  ministry,  which  are  as  follows : 
The  attorney  of  the  Republic  does  not  oppose.    Submitted  the  15th 
of  December,  1888. 

(Signed)  Fournier. 

Fourthly.  The  divers  documents  produced.  Having  heard  M.  Bour- 
goin, judge,  in  his  report,  and  after  having  deliberated  conformably 
with  the  law  judging  in  first  resort: 

Considering  that  by  ordinance  dated  yesterday,  the  11th  of  Decem- 
ber, the  president  appointed  provisional  administrators  for  the  Uni- 
versal Company  of  the  Interoceanic  Canal  of  Panama,  Denormandie, 
Baudelot,  and  Hue,  with  the  charge  of  proceeding  within  fifteen  days 
before  the  chamber  of  the  council; 

Considering  that  it  is  necessary  to  attend  to  the  provisional  admin- 
istration of  the  said  company: 

That  this  measure  is  required  in  the  interest  of  the  company  and  of 


196 


PANAMA  CANAL  TITLE. 


third  persons  who  have  dealt  with  it,  and  that  it  is  proper  to  confirm 
the  appointment  of  the  administrators  made  by  the  ordinance  above 
referred  to,  .and  the  powers  which  are  given  to  them  by  that  ordinance. 

Considering  that  it  is  proper,  besides,  to  authorize  them  to  sign, 
collectively  and  individually,  all  documents  and  to  give  all  delegal ions 
to  all  persons  cither  to  sign  in  the  name  of  the  provisional  administra- 
tors or  to  fulfill  the  whole  or  part  of  their  mis-ion; 

For  these  reasons:  Confirms  the  powers  conferred  on  Denormandie, 
Baudelot,  and  Hue  in  their  character  of  provisional  administrators  of 
the  Universal  Company  of  the  Interoceanic  Canal  of  Panama  by  the 
ordinance  aforesaid  and  in  the  terms  thereof,  and  by  extension  gives 
all  powers  to  the  said  administrators  to  sign  collectively  or  individually 
all  documents,  and  give  all  delegations  to  all  persons  either  to  sign  in 
the  name  of  the  provisional  administrators  or  to  fulfill  the  whole  or 
part  of  their  mission; 

Declares  that  in  ease  of  the  administrators  aforesaid  being  prevented 
from  acting,  they  shall  he  replaced  by  ordinance  of  the  president  of 
the  tribunal,  rendered  upon  simple  request. 

The  present  judgment  is  signed  on  the  minutes  by  the  president,  by 
the  reporting  judge,  and  by  the  clerk. 

(Signed)  Aubepin.  Boubgoin  and  Floquet. 

Done  and  adjudged  in  the  session  of  the  chamber  of  the  council  of 
the  said  civil  tribunal  of  first  instance,  department  of  the  Seine,  sitting 
at  the  palace  of  justice.  Paris.  Saturday.  December  15.  L888,  by  M. 
Aubepin,  president;  M.  Vanier,  vice-president;  and  M.  Bourgoin, 
judge.  In  the  presence  of  M.  Sollantin.  substitute  judge,  and  M  Four- 
nier,  substitute  of  the  Republic,  assisted  by  Floquet,  clerk. 

Saturday,  December  15,  1888. 

The  minute  of  the  present  judgment  has  been  signed  by  the  presi- 
dent, the  reporting  judge,  and  the  clerk. 

On  the  margin  of  the  minutes  of  the  present  judgment  is  found 
mention  of  its  being  recorded  as  follows: 

"Recorded  at  Paris  the  16th  of  December,  1888;  folio  31,  case  3. 
Received  the  sum  of  9  francs  38  c." 

Signed  as  a  copy : 

Floquet. 


EXHIBIT  H. 

JUDGMENT  OF  FEBRUARY  4,  1889  (CIVIL  TRIBUNAL  OF  THE  SEINE), 
DISSOLVING  THE  OLD  PANAMA  CANAL  COMPANY  AND  APPOINTING 
A  LIQUIDATOR. 

[Copy  of  the  judgment  of  the  civil  tribunal  of  the  Seine,  rendered  February  4,  1889,  pronouncing 
the  dissolution  of  the  Compagnie  Universelle  du  Canal  Interoceanique  de  Panama  and  appointing 
a  liquidator.] 

The  Court: 

In  consideration  that  the  civil  or  commercial  character  of  a  com- 
pany is  recognized,  not  by  the  particular  form  which  it  takes,  but  hy 
the  nature  of  the  enterprise  which  constitutes  its  principal  object; 
that  it  therefore  matters  little  that  the  Compagnie  du  Canal  Inter- 
oceanique de  Panama  is  a  Societe  anonyme,  this  circumstance  not 
being  enough  to  impress  upon  it  a  commercial  character; 

Considering  that  as  to  its  object,  according  to  article  2  of  its  arti- 
cles, it  comprises  the  construction  of  a  maritime  canal  for  deep-water 


PANAMA  CANAL  TITLE. 


197 


navigation  between  the  Atlantic  Ocean  and  the  Pacific  Ocean,  across 
the  part  of  the  American  Isthmus  which  belongs  to  the  United  States 
of  Colombia,  as  we'll  as  the  operation  of  said  canal  and  of  the  various 
enterprises  which  are  connected  therewith;  that  in  reality  the  company 
is  formed  for  the  operation  of  the  canal  and  in  view  of  the  profits  which 
it  may  obtain,  and  that  the  construction  itself  is  not  the  principal  aim 
of  the  enterprise  but  only  a  necessary  means  for  earning  it  out; 

That  the  operation  can  not  be  assimilated  to  a  transportation  busi- 
ness, the  company  limiting  itself  to  the  opening  of  a  new  way  for  nav- 
igation upon  payment  of  fixed  tolls; 

Considering  that  therefore  the  company  has  for  its  principal  object 
the  development  of  real  estate  under  conditions  under  which  the  State 
of  Colombia  might  have  developed  it  itself  if  it  had  not  granted  the 
concession  to  third  parties;  that  it  is  therefore  purely  civil,  and  that 
on  this  account,  its  duration  being  moreover  limited,  any  one  of  the 
associates  may  apply  for  its  dissolution,  in  conformity  with  article 
1871  of  the  civil  code; 

Considering  that  the  objection  would  be  unavailing  that  the  present 
application  has  been  made  in  violation  of  article  74  of  the  by-laws, 
according  to  which  no  proceeding  at  law  can  be  taken  by  one  or  more 
shareholders  against  the  company,  its  council  of  administration,  or  one 
of  the  members  of  the  board,  until  it  has  been  submitted  to  the  exam- 
ination of  the  shareholders*  meeting,  whose  opinion  is  to  be  submitted 
to  the  court  at  the  same  time  with  the  action:  that  on  the  one  hand  this 
provision,  which  implies  a  simple  opinion  to  be  stated  by  the  share- 
holders' meeting  and  not  at  all  a  preliminary  consent  to  be  given  by  it, 
is  not  of  such  a  character  as  to  be  binding  upon  the  court  when  it  is 
not  set  up  by  the  defendant;  that  it  could  not  moreover  prevail  against 
the  right  which  every  member  acquires  by  article  L871  of  the  civil  code, 
the  protection  of  which  concerns  considerations  of  public  policy:  that, 
on  the  other  hand,  it  appears  from  the  papers  in  the  case  that  if  the 
special  shareholders'  meeting  of  January  2b  last  could  not  be  legally 
organized,  in  spite  of  the  reiterated  notices  sent  to  the  shareholders, 
there  is  no  reason  to  hope  that  a  new  call  would  have  a  more  efficacious 
result;  that  thus  the  plaintiffs  would  be  deprived  by  the  mere  force  of 
circumstances,  and  without  possible  recourse,  of  a  right  which  article 
1871  of  the  civil  code  intended  to  assure  them;  that  finally  the  calling 
of  a  new  meeting  would  involve,  according  to  the  articles,  such  delays 
that  the  corporate  interests  which  are  now  at  stake  might  suffer  irrep- 
arable injury: 

Considering  that  the  further  objection  can  not  prevail  that,  in 
accordance  with  article  68  of  the  by-laws, the  dissolution  of  the  com- 
pany before  its  expiration  must  be  voted  by  a  meeting  of  shareholders, 
held  under  special  conditions  fixed  in  article  69;  that  none  of  the  terms 
of  these  articles  implies  the  idea  that  the  right  in  question  belongs 
exclusively  to  the  shareholders'  meeting  and  that  the  courts  are  deprived 
of  it;  that  such  a  provision  would  be  in  contradiction  with  the  principle 
laid  down  in  article  1871  of  the  civil  code,  and  would  obviously  nullify 
its  objects;  • 

That,  furthermore,  what  was  said  above  relative  to  the  shareholders' 
meeting  of  January  20  last  and  the  impossibility  of  calling  to  any  useful 
purpose  a  new  meeting  within  the  period  fixed  by  the  articles  is  perti- 
nent here  again,  and  that  from  every  point  of  view  the  application 
should  be  received; 


198 


PANAMA  CANAL  TITLE. 


Considering  that,  on  the  merits,  article  1871  of  the  civil  code  con- 
fers upon  the  court  the  power  of  deciding  finally  whether  the  com- 
pany, under  tin1  circumstances  contemplated,  can  still  continue  its 
normal  course,  or  whether  its  dissolution  is  rendered  necessary  by  the 
very  situation  in  which  it  is  placed:  that  it  is  now  established  that  the 
Compagnie  du  Canal  de  Panama  has  ceased  to  act  in  :i  regular  way: 
that  it  has  suspended  payment  upon  its  securities  and  that  the  contin- 
uation of  work  on  the  canal  is  insured  only  for  a  very  limited  time; 
that  since  December  14  last  it  has  been  necessary  to  contide  its  man- 
agement provisionally  to  appointees  of  the  court,  who  have  taken  the 
necessary  measures  to  protect  temporarily  the  important  interests  con- 
nected with  its  existence:  that  these  wholly  provisional  measures  are 
now  insufficient,  or  will  shortly  become  so,  and  that  it  is  important  to 
take  action  to  ward  off  dangers,  the  consequences  of  which  would  be 
irreparable; 

Considering,  therefore,  that  there  is  occasion  for  pronouncing  the 
dissolution  of  the  company  and  providing  for  its  winding  up;  that 
there  is  occasion  also  for  ordering  a  provisional  execution  of  the  pres- 
ent judgment,  notwithstanding  appeal,  and  without  security,  applying 
article  135  of  the  code  of  civil  procedure; 

For  the>e  reasons, 

Pronounces  the  dissolution  of  the  Compagnie  Universelle  du  Canal 
Interoceanique  de  Panama  and  orders  that  it  be  wound  up: 

Appoints  Mr.  Joseph  Brunet,  liquidator  of  said  company  with  the 
broadest  powers,  especially  to  grant  or  contribute  to  an}T  new  com- 
pany all  or  a  part  of  the  corporate  assets,  to  enter  into  or  ratify  with 
the  contractors  for  the  Panama  Canal  all  agreements  having  for  their 
purpose  the  insurance  of  the  continuance  of  the  works  and  to  this  end 
to  contract  all  loans  and  form  all  sinking  funds; 

Declares  that  in  case  the  liquidator  appointed  can  not  act  provision 
will  be  made  for  replacing  him  in  the  ordinary  way: 

Authorizes  him  henceforth  to  apply  in  the  same  way  for  all  special 
powers  which  may  be  necessary  for  the  performance  of  his  duties, 
and.  if  he  thinks  ht.  for  the  addition  of  one  or  more  liquidators; 

Orders  provisional  execution  of  the  present  judgment,  notwithstand- 
ing appeal  and  without  security: 

Condemns  the  defendant  company  to  the  expenses. 


EXHIBIT  I. 

BY-LAWS  OF  THE  NEW  PANAMA  CANAL  COMPANY. 
New  Panama  Canal  Company.  Charter. 


Title  I. — Formation  and  Object  of  the  Company:  Name:  Prin- 
cipal Office:  Duration.  , 

Article  1.  There  is  formed  between  the  present  founder  and  the 
subscribers  to  the  shares  hereinafter  created  a  commercial  joint-stock 
company  under  the  name  of  the  Compagnie  Nouvelle  du  Canal  de 


PANAMA  CANAL  TITLE. 


199 


Panama,  in  conformity  with  the  acts  of  July  24,  18G7,  and  August  1 
1893. 

Art.  2.  This  company  has  for  its  objects  (1)  the  completion  of  the 
maritime  ship  canal  between  the  Atlantic  and  Pacific  oceans;  (2)  the 
exploitation  of  the  said  canal  and  of  the  various  enterprises  connected 
therewith:  (3)  the  construction  and  exploitation  of  all  lines  of  railway 
within  the  vicinity  of  the  canal  and  the  management  of  all  interests 
which  the  company  may  possess  and  acquire  in  lines  already  con- 
structed: (1)  the  exploitation  of  lands  granted  and  of  mines  therein 
contained. 

All  under  the  clauses  and  conditions  of  the  concession  as  fixed  by 
the  act  of  the  Congress  of  the  United  States  of  Colombia,  dated  May 
18, 1878  (law  28  of  1878),  and  of  the  extensions  of  the  concession  dated 
December  26,  1890  (law  107  of  1890),  and  April  4,  1893. 

Art.  3.  The  principal  office  of  the  company  is  at  Paris,  provisionally 
fixed  at  No.  63  bis,  Hue  de  la  Victoire,  and  hereafter  at  such  place  as 
the  council  of  administration  shall  designate. 

Art.  1.  The  company  shall  begin  from  the  date  of  its  formal  organi- 
zation. Its  duration  shall  be  the  same  as  that  of  its  concession— that 
is  to  say,  ninety-nine  years  from  the  date  when  the  canal  shall  be  open 
in  whole  or  in  part  for  public  service  or  when  the  company  shall  begin 
the  collection  of  dues  for  transit  and  navigation. 

Title  II. — Contributions;  Capital;  Shares;  Payments. 

Art.  5.  A  party  to  these  presents  is  M.  Jean  Pierre  Gautron.  judi- 
cial administrator  of  the  civil  tribunal  of  the  Seine,  residing  at  No.  13 
Kue  Tronchet,  Paris, 

" Acting  as  and  in  the  capacity  of  sole  liquidator  of  the  Compagnie 
Universelle  du  Canal  Interoceanique  de  Panama,  by  virtue  of  the 
powers  conferred  by  judgment  of  the  civil  tribunal  of  the  Seine,  dated 
February  4.  1889," 

M.  Gautron.  appointed  to  said  office  of  liquidator  by  a  judgment  of 
the  Chambre  du  Conseil  of  the  civil  tribunal  of  the  Seine,  dated  July 
21,  1893,  in  his  said  capacity  contributes  to  the  company: 

First.  All  rights  accruing  to  the  company  in  liquidation  from  the 
laws  of  the  Governments  of  the  United  States  of  Colombia,  dated 
May  18,  1878.  and  December  26,  1890,  as  well  as  from  any  decrees, 
acts,  or  things  whatever  which  have  occurred  in  the  execution  of 
these  laws,  with  all  the  advantages  provided  by  these  Laws,  together 
with  all  lands  and  real  estate  granted  to  the  company  in  liquidation,  or 
acquired  by  it. 

All  subject  to  the  fulfillment  of  the  conditions  of  the  laws  and 
extensions  of  the  concessions,  and  to  the  payment  of  all  sums  remain- 
ing due  from  the  liquidator  to  the  Colombian  Government: 

Second.  The  works  executed  and  under  execution,  workshops, 
buildings,  hospitals,  plant,  erected  and  not  erected,  materials  and  sup- 
plies, etc..  belonging  to  the  Compagnie  Universelle  du  Canal  Inter- 
oceanique in  liquidation,  as  well  as  all  deposits  as  security  made  by 
said  company  in  liquidation; 

Third.  The  plants,  estimates,  studies,  documents  of  every  nature, 
collected  by  the  Compagnie  Universelle  du  Canal  Interoceanique. 
relating  in  any  manner  to  the  study,  execution,  or  exploitation  of  the 


200 


PANAMA  CANAL  TITLE 


canal  or  its  dependencies,  as  well  as  the  benefit  of  all  agreements 
with  all  third  persons; 

Fourth.  The  rights  of  every  nature,  part  interests,  and  generally 
any  others  whatsoever,  which  may  belong  to  the  Compagnie  Timer 
selle  du  Canal  Interoceanique  in  liquidation,  in  the  railroad  from  Pan- 
ama to  Colon,  operated  by  an  American  company  called  the  Panama 
Railroad  Company,  whose  principal  office  is  at  New  York,  as  said 
rights  are  enjoyed  and  exist;  M.  Gautron,  as  Liquidator,  binding  him- 
self to  transfer  the  same  to  the  present  company  in  the  form  required 
by  the  laws  of  the  United  States  of  America; 

In  such  manner  moreover  as  the  said  rights  and  properties  are 
enjoyed  and  exist  and  in  the  condition  in  which  they  are. 

The  present  company  shall  be  the  owner  of  the  property  and  rights 
granted  and  contributed  from  the  date  of  its  formal  organization, 
except  as  hereinafter  provided  with  respect  to  the  Panama  Railroad. 

This  grant  and  contribution  are  made  by  M.  Gautron  with  the  res- 
ervations and  subject  to  the  conditions  hereinafter  expressed,  to  wit; 

First.  There  shall  be  appropriated  to  the  liquidator  60  per  cent  of  the 
net  profits  of  the  enterprise,  as  these  profits  shall  be  determined  under 
articles  51  and  52  hereof. 

Second.  There  shall  be  appropriated  50,000  shares,  full  paid,  on 
account  of  those  now  issued  to  the  Government  of  the  United  States 
of  Colombia,  in  accordance  with  the  extension  law  of  December  26, 
1890. 

Third.  The  rights  of  every  nature  in  the  Panama  Railroad,  belong- 
ing to  the  estate  in  liquidation  and  contributed  by  M.  Gautron  under 
section  4  of  this  article  shall  become  the  property  of  the  present  com- 
pany from  and  after  the  stockholders'  meeting  provided  for  by  article 
75  hereof,  without  any  pecuniary  compensation,  but  upon  the  express 
condition  that  the  canal  be  constructed  within  the  time  fixed  by  the 
agreement  of  concession.  Upon  default  in  completion  within  such 
time,  said  rights  shall  revert  to  the  estate  in  liquidation. 

If,  contrary  to  all  expectation,  the  meeting  in  question  should  not 
take  the  necessary  action  for  the  completion  of  the  canal,  or  if  the 
course  of  action  adopted  by  the  meeting  can  not  be  carried  out,  the 
said  rights  in  the  railroad  shall  remain  the  property  of  the  present 
company,  but  it  shall  pay  into  the  estate  in  liquidation  the  sum  of 
20,000,000  francs  b}T  way  of  indemnity,  and  the  share  of  profits  set 
apart  or  the  estate  in  liquidation  shall  be  half  the  profits  of  the  present 
company,  without  other  deductions  than  those  provided  in  sections  2 
and  3  of  article  51  hereof. 

Accordingly  said  rights  shall  remain  inalienable  in  the  hands  of  the 
new  company  until  either  the  pa}Tment  of  said  sum  of  20,000,000  or 
the  entire  completion  of  the  canal. 

Fourth.  Until  the  entire  completion  of  the  canal,  M.  Gautron,  in  his 
official  capacity,  shall  have  the  right  to  appoint  a  commission  of  control 
composed  of  three  members  taken,  as  far  as  possible,  from  among  the 
engineers  of  the  department  of  bridges  and  roads  and  the  inspectors 
of  finances,  to  inspect  the  progress  of  the  works,  the  condition  and 
maintenance  of  the  plant  and  buildings,  as  well  as  the  accounts  relating 
to  these  different  objects. 

The  expense  of  this  commission  shall  be  borne  by  the  new  company. 

Art.  6.  The  capital  of  the  company  is  fixed  at  65,000,000  francs, 
divided  into  650,000  shares  of  100  francs  each. 


PANAMA  CANAL  TITLE. 


201 


Of  these  650,000  shares,  50,000  full  paid  are  set  apart  for  the  Gov- 
ernment of  the  United  States  of  Colombia,  in  accordance  with  the 
extension  law  of  December  27,  1890,  as  provided  in  the  preceding 
article. 

As  for  the  balance  of  the  600,000  shares,  they  are  to  be  issued  for 
cash  subscriptions. 

Capita]  may  be  increased  once  or  several  times  by  vote  of  the  regu- 
lar stockholders'  meeting-,  and  upon  the  proposition  of  the  council  of 
administration,  by  the  issue  of  new  shares. 

Art.  7.  The  50,000  shares  set  apart  for  the  Government  of  the 
United  States  of  Colombia,  though  full  paid,  shall  be  entitled  to  inter- 
est ov  dividends  only  on  the  same  terms  as  the  shares  issued  on 
subscription. 

These  50.000  shares  shall  remain  attached  to  their  respective  stubs 
and  shall  be  negotiable  under  the  conditions  provided  by  article  2  of 
the  French  law  of  August  1,  1893,  and  by  the  concession  laws. 

Art.  8.  A  preference  is  reserved  to  the  stockholders  and  bond- 
holders of  the  Compagnie  Universelle  du  Canal  Interoceanique  in 
liquidation,  in  subscribing  for  stock  of  the  present  company,  to  the 
extent  of  one-half  the  present  capital  and  the  total  amount  of  all 
future  issues. 

Art.  9.  The  amount  of  each  share  is  payable  in  cash  into  the  com- 
pany's treasury  or  to  the  representatives  wTho  shall  be  appointed  for 
subscriptions  by  the  new  company. 

It  shall  be  payable  as  follows:  25  francs  immediately  on  subscription; 
25  francs  on  October  15,  1894;  and  the  balance  as  calls  shall  be  made 
by  the  council  of  administration. 

Payments  shall  become  due,  in  accordance  with  calls  made  by  the 
council,  upon  notice  published  one  month  in  advance  in  one  of  the  Paris 
newspapers  designated  for  the  publication  of  legal  notices. 

Any  shareholder  may,  however,  pay  up  his  shares  in  advance  and  at 
any  time. 

Art.  10.  The  first  paj'ment  is  represented  by  a  receipt  in  the  name 
of  the  subscriber,  which,  within  two  months  from  the  organization  of 
the  company,  shall  be  exchanged  for  a  provisional  certificate,  also  in 
his  name. 

All  further  payments,  except  the  last,  shall  be  indorsed  upon  this 
provisional  certificate. 

Upon  the  last  payment  being  made  a  permanent  certificate  shall  be 
issued  to  the  shareholder,  which  shall  be  either  to  bearer  or  in  his  name, 
at  his  option. 

Art.  11.  The  council  of  administration  shall  fix  the  form  and  style 
of  the  certificates  of  stock. 

Provisional  and  temporary  certificates  shall  be  taken  from  a  book 
with  stubs;  they  shall  be  numbered  in  order  and  stamped  with  the  seal 
of  the  company;  they  shall  be  signed  hy  two  administrators,  or  by  one 
administrator  and  a  person  appointed  by  the  council  of  administration. 

Art.  12.  All  payments  in  arrear  upon  calls  shall  bear  interest  at  the 
rate  of  6  per  cent  per  annum  from  the  day  when  they  shall  be  payable, 
for  the  benefit  of  the  company. 

In  default  of  payment  within  the  month  wherein  the  same  shall 
become  payable  the  council  of  administration  may,  at  its  option,  bring 
action  at  law,  or  sell  the  certificates  on  which  payment  shall  not  have 
been  made. 


202 


PANAMA  CANAL  TITLE. 


Such  sale  may  take  place  fifteen  days  after  notice  published  in  the 
"Journal  Officiel"  or  one  of  the  other  papers  in  the  department  of  the 
Seine  designated  for  the  publication  of  legal  notices.  It  shall  take 
place  at  the  risk  of  the  person  in  default  through  blu  agent  de  change 
of  the  Paris  Bourse  or  through  a  notary,  at  the  option  of  the  council 
of  administration. 

The  certificates  for  the  shares  sold  will  become  void  and  will  be 
replaced  by  new  certificates  in  the  name  of  the  purchasers,  of  the 
same  numbers. 

The  price  of  the  sale  will  be  deducted  from  the  sums  due  the  com- 
pany from  the  subscriber  for  the  share,  and  his  assigns,  who  will  all 
remain  jointly  and  severally  liable  for  the  difference,  and  entitled  to 
any  surplus. 

Art.  13.  Shares  shall  stand  in  the  names  of  subscribers  until  fully 
paid,  in  accordance  with  the  law  of  August  1.  L893. 

Moreover,  no  share  can  be  sold,  and  the  council  of  administration 
can  not  authorize  its  transfer,  until  it  shall  have  been  fully  paid. 

This  prohibition,  however,  will  not  apply  to  shares  belonging  to 
future  issues. 

Every  owner  of  shares  to  bearer  shall  always  have  the  right  to 
require  the  conversion  of  shares  to  bearer  into  shares  registered  in  his 
name. 

Art.  14.  The  shares  confer  a  light  to  a  proportional  part  in  the 
corporate  assets,  in  profits  to  be  distributed  as  interest  or  dividends 
and  in  reserve  funds. 

Interest  and  dividends  are  paid  to  bearer  either  upon  presentation 
of  the  certificate  to  be  stamped,  for  registered  certificates,  or  upon  pre- 
sentation of  the  coupon,  for  certificates  to  bearer,  at  the  company's 
office  at  the  times  which  shall  be  fixed  b}T  the  council  of  administration. 

Art.  15.  The  transfer  of  shares  to  bearer  is  effected  by  simple 
delivery. 

That  of  registered  certificates  shall  take  place  by  a  declaration  of 
transfer  entered  on  the  books  of  the  company  and  signed  by  the 
transferor  and  transferee  or  their  attorneys. 

The  expenses  of  transfers,  changes,  and  conversions  shall  be  borne 
by  the  new  assignees. 

Art.  16.  The  council  of  administration  may  authorize  the  keeping 
and  deposit  of  certificates  to  bearer  in  the  company's  treasury.  In  that 
case  it  shall  determine  the  form  of  the  registered  certificates  of  deposit, 
the  conditions  of  their  delivery,  and  the  precautions  with  which  the 
execution  of  this  measure  should  be  surrounded  in  the  interest  of  the 
company  and  of  the  shareholders. 

Art.  17.  Shareholders  shall  not  be  liable  upon  the  contracts  of  the 
company  beyond  the  amount  of  the  shares  which  they  own. 

In  no  event  can  any  call  be  made  for  funds  beyond  the  amount  of 
the  shares. 

Art.  18.  The  shares  are  indivisible,  as  regards  the  company,  which 
recognizes  only  a  single  owner  for  each  share. 

All  owners  of  undivided  parts  of  a  share  must  be  represented  in 
dealing  with  the  company  by  one  and  the  same  person. 

Art.  19.  The  rights  and  obligations  attached  to  the  share  follow 
the  certificate  into  whatever  hands  it  comes. 

The  possession  of  a  share  imports  full  consent  to  the  statutes  of  the 
company  as  well  as  to  all  acts  of  a  stockholders'  meeting. 


PANAMA  CANAL  TITLE. 


203 


The  heirs,  creditors,  or  assigns  of  a  shareholder  can  not,  on  any 
pretext,  require  a  partition,  or  sale  of  the  corporate  property,  obtain 
an  attachment,  require  the  sealing  of  the  company's  hooks,  registers, 
papers,  and  securities,  nor  interfere  with  its  administration. 

They  must,  for  the  exercise  of  their  rights,  rely  exclusively  upon 
the  corporate  statements,  the  action  of  the  stockholders'  meetings,  and 
the  decision  of  the  council  of  administration. 


Art.  20.  The  company  is  administered  by  a  council  composed  of  not 
less  than  9  nor  more  than  15  members  chosen  from  among  the  share- 
holders. 

Art.  21.  The  administrators  do  not,  in  consequence  of  their  duties, 
contract  any  personal  or  joint  and  several  obligations.  They  are 
responsible  only  for  the  performance  of  their  duties. 

Art.  22.  Administrators  are  appointed  by  the  stockholders'  meeting 
for  not  more  than  six  years. 

If  the  council  is  composed  of  9,  12,  or  15  members,  one-third  shall 
be  elected  every  two  years,  the  outgoing  members  to  be  determined 
during  the  first  period  of  six  }^ears  by  lot,  and  thereafter  by  seniority. 

If  the  number  of  administrators  be  any  other  than  those  above  speci- 
fied, the  stockholders'  meeting  shall  determine  the  mode  of  choosing 
new  members  and  the  duration  of  their  terms. 

Outgoing  administrators  may  always  be  reelected. 

The  second  meeting  of  stockholders  for  organization  shall  fix  the 
number  of  members  of  the  first  council  and  shall  proceed  to  choose 
them. 

This  first  council  may,  if  it  think  fit,  add  to  itself  new  members  within 
the  limits  hereinbefore  fixed,  and  must  cause  appointments  so  made 
to  be  ratified  by  the  first  regular  stockholders'  meeting. 

Art.  23.  In  case  of  vacancy  arising  from  resignation  or  death, 
the  council  of  administration  may  fill  the  same  until  the  next  meeting 
of  stockholders. 

Administrators  thus  appointed  continue  in  office  only  until  the 
expiration  of  the  terms  of  their  predecessors. 

Art.  24.  Every  administrator  must  be  the  owner  of  250  shares,  which 
are  registered  in  his  name  and  inalienable.  The}T  shall  be  stamped  to 
indicate  this  inalienability  and  remain  deposited  in  the  company's 
treasury  during  the  whole  term  of  office  of  the  owner. 

These  shares  constitute  a  guaranty  for  all  acts  of  management. 

Art.  25.  The  council  of  administration  shall  appoint  each  year  from 
among  its  members  a  president  and,  if  there  be  occasion,  one  or  more 
vice-presidents. 

The  president  and  vice-president  may  always  be  reelected.  In  case 
of  the  absence  of  the  president  and  of  the  vice-president  or  vice- 
presidents,  the  council  may  appoint,  at  each  session,  one  of  its  mem- 
bers to  fulfill  the  duties  of  the  office. 

Art.  26.  The  council  of  administration  shall  meet  at  least  once  a 
month.    It  shall  meet  also  at  the  call  of  the  president  as  often  as  the 


Questions  shall  be  decided  by  a  majority  of  the  members  present. 
In  case  of  equal  division  the  vote  of  the  president  shall  preponderate. 
Five  administrators  at  least  must  be  present  to  form  a  quorum. 


Title  III. — Council  of  Administration. 


interests  of  the 


204 


PANAMA  CANAL  TITLE. 


When  only  five  or  six  administrators  are  present  all  action,  to  be 
valid,  must  be  taken  by  a  majority  of  four  votes. 

No  member  of  the  council  can  vote  by  proxy. 

Art.  27.  The  proceedings  of  the  council  of  administration  shall  be 
recorded  by  minutes  signed  by  the  president  and  one  of  the  members 
present  at  the  meeting. 

Copies  or  extracts  from  these  minutes  must,  to  be  produced  in  evi- 
dence elsewhere,  be  certified  by  the  president  or  hy  two  administrator-. 

Art.  28.  The  council  of  administration  is  vested  with  the  broadest 
powers  for  the  management  and  administration  of  the  affairs  of  the 
company,  for  the  selection  and  exploitation  of  the  public  lands  granted 
by  paragraphs  7  and  8  of  article  1,  and  by  article  4  of  the  concession 
law. 

The  council  of  administration  may  ask  any  new  concessions,  consent 
to  all  agreements  with  third  parties  for  the  purchase  of  enterprises  or 
of  concessions  connected  with  any  of  the  objects  of  the  company. 

It  shall  appoint  and  dismiss  employees,  determine  their  functions 
and  powers,  hx  their  salaries  and  pay. 

It  shall  order  and  regulate  expenditures. 

It  shall  sign  correspondence  as  well  as  all  notes,  indorsements,  drafts, 
cheques,  transfers,  and  conversions  of  assets  and  securities  belonging 
to  the  company,  and  it  shall  contract  and  consent  to  all  advances. 

It  shall  take  all  financial  measures  accessary  to  the  progress  of  the 
company,  and  make  all  loans  other  than  those  which  must  be  authorized 


It  shall  lay  before  the  stockholders'  meeting  all  propositions  con- 
cerning loans  on  mortgage  and  the  issue  of  obligations. 

It  shall  administer  the  rights  in  the  Panama  Railroad  Company  con- 
tributed to  the  company  under  the  terms  of  articles. 

It  shall  arrange  the  order  of  business  for  stockholders'  meetings  and 
the  accounts  which  are  to  be  submitted  to  them.  It  shall  make  a  report 
to  each  stockholders'  meeting  upon  the  accounts  and  the  condition  of 
the  corporate  affairs. 

It  shall  fix  provisionally  the  dividend  and  determine,  if  occasion 
arises,  the  installment  to  be  paid  on  July  1  on  the  receipts  and  dis- 
bursements closed  by  the  inventory  June  30  preceding. 

It  shall  decide  upon  the  following  subjects,  to  wit :  1,  calls  for  money 
upon  the  shares;  2,  temporary  investment  of  funds  in  hand;  3,  studies 
and  projects,  plans  and  estimates  for  the  execution  of  the  works;  4, 
agreements  and  bargains  for  works  of  various  characters,  bargains 
with  penalty,  and  contracts  not  concerning  the  works;  5,  hiring,  sell- 
ing, letting,  and  exchanging  real  and  personal  property,  purchasing 
and  hiring  vessels  or  machines  necessary  for  the  execution  of  the 
works  and  the  exploitation  of  the  enterprise;  6,  annual  budgets;  7. 
fixing  and  modifying  dues  of  every  nature  to  be  collected  by  virtue  of 
the  concession,  conditions  and  manner  of  collecting  tolls;  8,  disposi- 
tion of  reserve  funds;  9,  regulation  of  deposit  of  stock  and  obligations 
of  the  company. 

It  shall  sue  for  the  collection  of  dues,  the  recovery  of  all  debts,  give 
all  acquittances  and  discharges,  consents  to  all  replevies  of  mortgaged 
property,  distresses,  attachments,  and  other  impediments,  with  all 
releases  of  preference,  mortgage,  and  suit  for  cancellation,  all  before 
or  after  payment.    It  may  create  all  preferences. 

It  shall  authorize  all  judicial  actions,  whether  as  plaintiff  or  as 


PANAMA  CANAL  TITLE.  205 

defendant,  treat,  adjust,  and  compromise  the  said  actions,  as  well  as  all 
affairs  of  the  company. 

In  general  it  shall  do,  in  the  corporate  interest,  all  acts  which  it 
thinks  necessary  and  useful,  the  powers  above  recited  being  purely 
declaratory  and  not  in  limitation  of  the  rights  of  the  council  of 
administration. 

Art.  29.  The  council  of  administration  may,  for  the  general  admin- 
istration of  the  company,  delegate  all  or  a  part  of  its  power  either  to 
one  or  more  of  its  members,  with  the  title  of  administrator-delegate 
or  to  one  or  more  managers  or  submanagers  taken  from  outside  the 
council. 

It  may.  moreover,  delegate  either  to  one  or  more  administrator^,  or 
to  one  of  the  employees  of  the  company,  or  to  one  or  more  third  per- 
sons, all  or  a  part  of  its  powers  by  special  authorization  and  for  one 
or  more  definite  affairs  or  objects. 

Art.  30.  The  administrators  shall  be  compensated,  over  and  above 
the  share  of  profits  fixed  in  article  52.  by  tokens  of  attendance,  the 
amount  of  which  shall  be  determined  by  the  stockholders'  meeting  and 
which  it  shall  be  the  duty  of  the  council  of  administration  to  distribute 
to  its  members. 

Title  IV. — Technical  Commission. 

Art.  31.  The  council  of  administration  is  authorized  to  associate 
with  itself  a  technical  commission  chosen  from  among  persons  com- 
petent in  matters  of  public  works,  and  especially  from  the  retired 
inspectors-general  of  the  departments  of  bridges  and  reads  and  finance. 

This  commission,  upon  communications  made  to  it  by  the  council  of 
administration,  shall  give  its  opinion  on  questions  relative  to  the 
execution  of  the  works. 

The  number  of  members  of  the  technical  commission,  as  well  as 
their  remuneration,  shall  be  fixed  by  the  council  of  administration. 

Title  V. — Commissaires. 

Art.  32.  The  stockholders'  meeting  shall  appoint  one  or  more  com- 
missaires. members  or  not,  invested  with  the  functions  committed  to 
them  by  law. 

If  any  of  the  commissaires  can  not  act,  the  one  or  more  who  remain 
shall  act  without  them. 

A  compensation  is  allowed  them,  to  be  fixed  by  the  stockholders' 
meeting. 

Title  VI. —Stockholders'  Meeting. 

Art.  33.  A  regularly  constituted  stockholders'  meeting  shall  repre- 
sent all  the  stockholders. 

Art.  34.  The  stockholders'  meeting  shall  be  composed  of  all  holders 
of  at  least  10  shares. 

All  holders  of  less  than  10  shares  may  unite  to  form  the  necessa  re- 
number and  cause  themselves  to  be  represented  by  one  of  their  num- 
ber as  provided  by  the  law  of  August  1.  1893. 

The  meeting  shall  be  regularly  constituted  when  the  shareholders 
who  compose  it  represent  a  quarter  of  the  capital  of  the  company. 

Art.  35.  When,  upon  first  assembling,  the  stockholders  present  do 
not  comply  with  the  conditions  above  specified,  in  order  to  make  the 


206 


PANAMA  CANAL  TITLE. 


proceedings  of  the  meeting  valid  it  may  be  adjourned  for  not  less  than 
twenty  days. 

A  second  call  shall  he  made  in  the  form  prescribed  by  article  37 
hereof. 

The  deliberations  of  this  second  meeting  can  only  relate  to  the  order 
of  business  provided  for  the  first  meeting.  Its  acts  shall  be  valid, 
whatever  may  be  the  amount  of  capital  represented  by  the  stock- 
holders. 

Art.  36.  A  stockholders'  meeting  shall  be  held  every  year  at  a  day 
and  place  fixed  by  the  council  of  administration  before  December  31. 

Extraordinary  meetings  also  shall  be  held  whenever  the  council  of 
administration  may  consider  it  useful. 

Art.  37.  Ordinary  and  extraordinary  meetings  may  be  called  by 
means  of  a  notice  inserted  at  least  twenty  days  previously  and  in  one 
of  the  Paris  papers  designated  for  the  publication  of  legal  notices. 

Art.  38.  Shareholders,  in  order  to  have  the  right  to  take  part  in  or 
to  have  themselves  represented  at  stockholders'  meetings,  must  qualify, 
at  the  domicile  of  the  company,  at  least  five  days  before  the  meeting, 
by  the  deposit  of  their  certificates  in  the  company's  treasury  or  in  that 
of  one  of  the  establishments  designated  for  this  purpose  by  the  council 
of  administration. 

Deposits  made  under  these  conditions  give  a  right  to  the  issue  of 
cards  of  admission  in  the  name  of  the  depositor. 

Registered  holders  of  registered  shares  or  of  certificates  of  deposit 
have  also  the  right  to  be  represented  at  meetings  by  proxies  furnished 
with  regular  powers,  the  form  of  which  shall  be  determined  by  the 
council  of  administration. 

Holders  of  powers  must  deposit  their  proxies  at  the  domicile  of  the 
company  within  the  time  fixed  by  the  council  of  administration  for 
each  meeting. 

No  one  can  represent  a  shareholder  at  the  meeting  unless  he  is 
himself  a  member  of  the  meeting. 

Married  women,  however,  may  be  represented  by  their  husbands  if 
he  has  the  management  of  their  rights  and  shares,  and  in  like  manner 
minors  or  incompetents  may  be  represented  by  their  guardian. 

Usufructuaries  and  naked  owners  must  be  represented  by  one  of 
them,  furnished  with  a  power  from  the  other,  or  by  a  common  proxy 
who  is  a  member  of  the  meeting. 

Companies  which  are  stockholders,  as  well  as  the  Government  of 
Colombia,  may  each  be  represented  by  a  delegate  who  is  not  himself 
a  shareholder. 

Art.  39.  The  stockholders'  meeting  shall  be  presided  over  by  the 
president  or  one  of  the  vice-presidents,  and,  in  default  of  these,  by  an 
administrator  appointed  by  the  council. 

The  two  largest  shareholders  present  at  the  opening  of  the  meeting, 
who  accept,  shall  be  appointed  tellers. 

The  officers  of  the  meeting  shall  appoint  the  secretary. 

Art.  40.  Action  by  the  stockholders'  meeting  shall  be  determined  by 
a  majority  of  votes  of  the  members  present  or  regularly  represented. 

In  case  of  equal  division  the  vote  of  the  president  shall  preponderate. 

Art.  41.  Ten  shares  shall  give  the  right  to  one  vote.  The  same 
shareholder  can  not  cast  in  all  more  than  200  votes,  whether  as  share- 
holder or  as  proxy. 

Art.  42.  A  secret  vote  may  be  required  by  10  members  represent- 
ing together  at  least  200  votes. 


PANAMA  CANAL  TITLE. 


207 


Art.  43.  The  action  of  the  stockholders'  mooting-  is  recorded  in 
minutes  signed  by  the  president  the  tellers,  and  the  secretary. 

Copies  of  extracts  from  these  minutes  to  be  used  in  proceedings  at 
law  or  otherwise  must  be  certified  by  the  president  or  by  two  adminis- 
1  rators. 

Art.  44.  At  each  stockholders' meeting  a  List  shall  be  kept  of  mem- 
bers present.  It  shall  contain  the  names  and  residences  of  the  share- 
holders and  the  number  of  shares  held  by  each.  This  list  shall  be 
certified  by  the  officers  of  the  meeting  and  deposited  with  the  com- 
pany's records. 

Art.  45.  The  order  of  business  for  the  stockholders'  meeting  shall 
be  fixed  by  the  council  of  administration. 

No  other  questions  than  those  contained  in  this  order  of  business 
can  be  brought  before  the  meeting. 

Art.  46.  The  stockholders'  meeting  shall  hear  the  report  of  the 
council  of  administration  on  the  corporate  affairs. 

It  shall  also  hear  the  report  of  the  commissioner  or  commissioners 
upon  the  condition  of  the  company,  on  the  balance  sheet,  and  on  the 
accounts  presented  by  the  council  of  administration. 

It  shall  discuss  and,  if  need  be,  approve  the  accounts. 

It  shall  authorize,  on  proposal  of  the  council,  the  creation  of  special 
supplemental  reserve  and  sinking  funds  which  ma}7  be  found  useful. 

It  shall  fix  the  dividend  to  be  paid. 

It  shall  elect  administrators  in  place  of  those  retiring  and  the  com- 
missioners. 

It  shall  vote  all  loans  by  means  of  the  issue  of  obligations  or  by 
mortgage. 

It  shall  audit  the  first  accounts  after  the  execution  of  the  works. 

It  shall  pass  upon  the  propositions  of  the  council  of  administration. 

It  shall  vote  upon  the  increases  of  capital  proposed  by  the  council 
of  administration. 

It  shall  consider  and  finall}T  decide  upon  all  the  interests  of  the  com- 
pany, and  confer  upon  the  council  of  administration  all  the  supple- 
mentary powers  which  shall  appear  useful. 

It  shall  have  extraordinary  power  of  decision  upon  the  course  to  be 
taken  in  accordance  with  article  75  hereof. 

Art.  47.  The  action  of  the  stockholders'  meeting,  taken  in  conformity 
with  the  statutes,  shall  bind  all  shareholders,  even  although  absent  or 
dissenting. 

Title  VII. — Statements  of  Condition;  Inventories. 

Art.  48.  The  corporate  year  shall  begin  July  1  and  end  June  30. 

The  first  period  shall  comprise  the  time  between  the  formal  organ- 
ization of  the  company  and  June  30,  1895. 

Art.  49.  The  council  of  administration  shall  prepare  every  six 
months  a  summary  statement  of  the  condition  of  the  company  as  to 
assets  and  liabilities. 

This  statement  shall  be  submitted  to  the  commissioner  or  commis- 
sioners. 

Art.  50.  There  also  shall  be  made  up  at  the  end  of  each  corporate 
year  an  inventory  showing  the  real  and  personal  property  of  the  com- 
pany and  all  indebtedness  due  to  or  by  it. 

This  inventory  shall  be  presented  to  the  stockholders'  meeting. 


208 


PANAMA  CANAL  TITLE. 


Title  VIII. — Annual   Accounts;  Sinking  Funds;  Interest  ; 
Reserve  Funds;  Dividends. 

Art.  51.  The  annual  income  from  the  enterprise  shall  be  first  applied 
to  the  payment  of:  1.  The  share  for  which  the  United  States  of  ( Solom- 
bia  lias  stipulated  for  its  own  benefit,  according  to  the  terms  of  the 
concession  law.  2.  The  expenses  of  maintenance  and  exploitation; 
the  cost  of  administration,  and  all  corporate  charges  in  general;  interest 
and  sinking  funds  on  loans  which  may  have  been  contracted.  3.  The 
previous  deduction  of  one-twentieth  of  the  net  profits,  after  payment 
of  all  the  charges  hereinbefore  mentioned,  for  the  formation  of  a  legal 
reserve  fund.  4.  Five  per  cent  upon  the  corporate  capital,  the  income 
of  which  shall  be  applied  by  the  stockholders'  meeting,  in  accordance 
with  the  propositions  of  the  council  of  administration,  not  only  to  form 
the  sinking  fund  to  be  established  in  accordance  with  article  55  hereof, 
but  also  to  provide  dividend  on  the  shares  not  extinguished. 

Art.  52.  The  excess  of  annual  income  after  the  various  deductions 
provided  in  the  preceding  article  constitutes  the  net  income  or  profits 
of  the  enterprise.  From  these  profits  shall  be  deducted  5  per  cent  for 
the  benefit  of  the  council  of  administration. 

The  surplus  shall  belong:  To  the  amount  of  40  per  cent  to  the  shares 
issued  and  to  the  amount  of  60  per  cent  to  the  Compagnie  Universelle 
du  Canal  Interoceanique  in  Liquidation. 

Art.  53.  The  payment  of  interest  and  dividends  shall  be  made  at  the 
company's  office  or  at  the  offices  of  the  representatives  designated  by 
the  council  of  administration. 

The  pajmient  of  interest  shall  be  made  at  two  periods:  January  1 
and  Jul}7  1  in  each  year. 

Dividends  shall  be  payable  on  January  1  next  after  the  vote  of  the 
annual  stockholders'  meeting. 

The  council  may,  nevertheless,  if  it  thinks  fit.  authorize  a  payment 
on  account  of  dividends  on  the  preceding  1st  of  July. 

Art.  54.  Interest  and  dividends  remaining  unclaimed  at  the  expira- 
tion of  five  years  from  the  time  when  payable  shall  become  the 
property  of  the  company. 

Art.  55.  The  extinguishment  of  the  shares  shall  be  accomplished  in 
ninety-nine  years  from  the  putting  of  the  canal  in  operation. 

Provision  shall  be  made  for  this  extinguishment  by  means  of  the 
deduction  hereinbefore  provided  for  in  article  51,  the  amount  of  which 
shall  be  fixed  by  the  stockholders'  meeting,  on  recommendation  of  the 
council  of  administration. 

The  shares  to  be  paid  off  shall  be  designated  by  drawing  lots,  which 
shall  be  publicly  done  at  the  times  and  in  the  manner  fixed  by  the 
council  of  administration. 

Art.  56.  The  numbers  of  the  shares  drawn  for  payment  shall  be 
posted  in  the  company's  principal  office. 

Art.  57.  Shares  drawn  for  payment  shall  be  paid  at  the  places  desig- 
nated for  the  payment  of  dividends  and  interest. 

Holders  of  extinguished  shares  have  the  same  rights  as  holders  of 
shares  not  extinguished,  except  as  to  the  dividend  which  may  be  paid 
in  accordance  with  article  51  hereof. 

Art.  58.  The  share  of  60  per  cent  set  apart  for  the  Compagnie  Uni- 
verselle du  Canal  Interoceanique  in  liquidation,  may,  if  the  liquidator 
so  requests,  be  represented  by  certificates,  to  such  number  as  he  shall 


PANAMA    (ANAL  TITLE. 


209 


fix,  leaving  it  to  him  to  make  a  proper  distribution  thereof  among  the 
parties  in  interest. 

This  right  to  a  share  in  the  profits  shall  not  give  to  any  of  those  who 
enjoy  it  any  right  to  take  part  in  any  way  in  the  aets  or  administra- 
tion of  the  company. 

In  all  cases  the  provisions  of  articles  18  and  19  hereof,  concerning 
shares,  are  equally  applicable  to  the  certificates  of  interest. 

All  expenses  and  formalities  connected  with  these  certificates  must 
be  borne  by  the  holders. 

Before  distributing  these  certificates  the  liquidator  must  make 
arrangements  for  their  being  represented  in  dealings  with  the  new 
company;  these  arrangements  must  be  satisfactory  to  the  council  of 
administration  of  the  present  company. 

'  Art.  59.  The  reserve  fund  is  composed  of  the  accumulation  of  the 
sums  deducted  from  the  annual  profits,  in  accordance  with  article  51 
hereof. 

When  this  reserve  fund  reaches  one-tenth  of  the  capital  of  the  com- 
pany, its  creation  may  be  suspended.  It  must  be  resumed  when  the 
amount  of  the  reserve  has  sunk  below  one-tenth  of  the  capital  of  the 
company. 

Title  IX. — Modification  of  the  By-laws;  Dissolution. 

Art.  60.  If  experience  shall  show  the  desirability  of  making  modifi- 
cations in  or  additions  to  the  present  statutes,  the  stockholders'  meeting 
shall  proceed  to  make  them  in  accordance  with  articles  (31  and  62  hereof. 

It  may  especially  determine  upon  a  reduction  of  the  capital  of  the 
company,  a  reduction  in  the  duration,  the  prolongation  or  the  earlier 
dissolution  of  the  company,  its  consolidation  with  other  companies. 

It  may  even  introduce  modifications  as  to  the  object  of  the  company 
without,  however,  changing  its  essential  character. 

Art.  61.  Meetings  which  are  to  consider  the  different  subjects  men- 
tioned in  the  preceding  article  will  not  be  regularly  constituted  nor  will 
their  action  be  valid  unless  they  are  composed  of  a  number  of  share- 
holders representing  at  least  one-half  of  the  capital  of  the  company; 
but  in  such  case  the  council  of  administration  shall  have  the  right,  in 
its  calls,  to  reduce,  as  far  as  it  shall  think  desirable,  the  number  of 
shares  which  must  beheld  in  order  to  take  part  in  the  meeting:  and  in 
such  case  the  holder  of  the  minimum  number  of  shares  necessary  to 
take  part  in  the  meeting  shall  have  1  vote,  the  holder  of  10  shares  shall 
have  2  votes,  the  number  of  votes  increasing  at  the  rate  of  2  votes  for 
10  shares;-  provided,  that  the  total  number  of  votes  of  any  member 
shall  not  exceed  200. 

Moreover  all  owners  of  a  number  of  shares  less  than  that  fixed  for 
admission  to  the  meeting  may  unite  to  form  the  requisite  number  of 
shares  and  may  cause  themselves  to  be  represented  by  one  of  their  num- 
ber in  accordance  with  the  law  of  August  1,  1893. 

Art.  62.  It  is  here  explained  that  it  is  in  order  to  conform  to  the 
French  law  now  in  force  that  the  present  statutes  require  the  repre- 
sentation of  one-half  the  capital  of  the  company  at  the  stockholders' 
meetings  called  to  consider  the  subjects  specified  in  article  61  hereof, 
and  a  representation  of  one-quarter  of  the  capital  in  the  other  meetings; 
but  it  is  expressly  understood  that  the  company  may  take  the  benefit 
of  any  new  laws  which  may  decrease  the  amount  of  capital  necessarily 

8751—02  U 


210 


PANAMA  CANAL  TITLE. 


represented  in  stockholders'  meetings,  and  that  new  Legislative  provi- 
sions concerning-  this  question  will  become  applicable  to  the  company 
hereby  created  upon  a  resolution  to  that  effect  of  a  meeting-  of  stock- 
holders called  in  accordance  with  the  rules  laid  down  in  articles  34  and 
35  hereof. 

Art.  63.  Tn  case  of  dissolution  of  the  company  the  meeting  of  stock- 
holders on  recommendation  of  the  council  of  administration  shall 
determine  the  method  to  be  adopted  either  for  the  liquidation  or  reor- 
ganization of  the  company  as  a  new  company;  it  may  appoint  one  or 
more  liquidators,  and  may  confer  upon  them  the  broadest  powers, 

Art.  64.  During  liquidation  the  powers  of  the  meetings  of  stock- 
holders shall  continue  as  during  the  existence  of  the  company. 

Jt  shall  have,  especially,  the  right  to  approve  the  accounts  of  the 
liquidation  and  to  give  acquittance  therefor. 

The  appointment  of  liquidators  shall  terminate  the  powers  of  the 
administrators  and  of  all  mandatories. 

Title  X. — Conferring  of  Jurisdiction;  Suits. 

Art.  65.  In  accordance  with  article  20  of  the  concession  law  of 
May  18,  1878,  differences  which  may  arise  between  the  Government 
of  the  United  States  of  Colombia  and  the  company  shall  be  submitted 
to  the  Federal  supreme  court  (Colombia). 

But  for  all  other  litigations  the  company  shall  have  its  domicile  at 
Paris. 

Art.  66.  The  company  shall  be  considered  commercial  in  its  essence 
as  in  its  form,  and  shall,  accordingly,  be  within  the  jurisdiction  of  the 
tribunal  of  commerce  of  the  Seine. 

Art.  67.  Suits  concerning  the  general  and  collective  interests  of  the 
company  can  not  be  brought  either  against  the  council  of  administra- 
tion or  against  one  of  its  members,  except  in  the  names  of  share- 
holders representing  one-twentieth  of  the  capital  of  the  company. 
Actions  concerning  the  rights  of  members  can  not  be  brought  by  a 
shareholder,  or  group  of  shareholders,  representing  less  than  a  twen- 
tieth of  the  company's  capital. 

And  no  action  at  law,  brought  by  one  or  more  shareholders  against 
the  company,  its  council  of  administration,  or  one  of  its  members  can 
be  brought  into  court  until  after  having  been  submitted  to  the  examina- 
tion of  a  meeting  of  shareholders,  whose  opinion  shall  be  submitted  to 
the  magistrates  at  the  same  time  with  the  complaint  itself. 

Art.  68.  Every  shareholder  in  case  of  litigation  must  make  election 
of  a  domicile  at  Paris,  and  all  notices  and  summonses  to  him  may  be 
lawfully  served  at  the  domicile  by  him  elected,  without  regard  to  the 
distance  of  the  real  domicile. 

In  default  of  election  of  a  domicile,  he  shall  be  deemed  to  have 
elected,  for  notices  judicial  and  extrajudicial,  the  office  of  the  attorney 
of  the  Republic  at  the  civil  tribunal  of  first  instance  of  the  Seine. 

The  domicile  elected,  actually  or  impliedly,  as  has  just  been  stated, 
shall  carry  with  it  the  conferring  of  jurisdiction  on  the  competent 
tribunals  of  the  Seine. 

Art.  69.  In  all  litigations  which  may  arise  between  the  company 
and  third  persons,  notice  of  all  judicial  or  extrajudicial  documents 
must  necessarily  be  given  by  service  of  a  copy  personally  upon  the 
president  of  the  council  of  administration  at  the  principal  office  of  the 
company. 


PANAMA   CANAL  TITLE.  211 

Title  XL-  Temporary  Provisions. 

Art.  70.  The  subscription  of  the  entire  capital  of  the  company,  and 
the  payment  of  at  least  one-fourth  the  capital  in  cash,  shall  be  evi- 
denced by  a  declaration  of  the  founder  acknowledged  before  a  notary. 

To  this  declaration  shall  he  annexed  a  list  of  the  subscribers  and  the 
state  of  the  payments  made. 

Art.  71.  This  declaration,  with  vouchers,  shall  be  submitted  to  the 
first  stockholders'  mooting,  which  shall  verify  its  accuracy. 

The  same  meeting  shall  cause  the  value  of  the  contributions  herein- 
before mentioned,  and  the  consideration  for  the  advantages  agreed  to 
be  given,  to  be  appraised. 

Art.  72.  A  second  meeting  shall  be  called  to  approve,  if  proper, 
the  contribution  and  advantages  in  question. 

The  same  meeting  shall  elect  the  administrators  and  the  commis- 
sioners created  by  article  32. 

The  minutes  of  the  meeting  shall  show  the  acceptance  of  the 
administrators  and  of  the  commissioners. 

The  company  shall  be  organized  upon  their  acceptance. 

Art.  73.  Stockholders'  meetings  called  for  the  organization  of  the 
company  shall  be  composed  of  all  the  shareholders,  who  have  each  a 
vote,  provided  that  the  holders  of  several  shares  shall  have  one  vote 
for  every  ten  shares;  but  no  person  shall  have  more  than  ten  votes. 

The  meetings  for  organization  must  be  composed  of  a  number  of 
shareholders  representing  half  the  capital  of  the  company.  The 
capital,  one-half  of  which  must  be  represented  for  verification  of  the 
contribution,  shall  be  composed  only  of  the  payments  not  subject  to 
verification. 

If  the  meeting  does  not  include  a  number  of  shareholders  repre- 
senting half  the  capital,  it  can  act  only  provisionally;  in  such  case  a 
new  meeting  shall  be  called. 

Two  notices  published  eight  days  apart,  at  least  one  month  in 
advance,  in  one  of  the  papers  in  which  legal  notices  are  published  in 
Paris,  shall  give  notice  to  the  shareholders  of  the  provisional  action 
taken  by  the  first  meeting,  and  this  action  shall  become  final  if 
approved  by  a  new  meeting  composed  of  a  number  of  shareholders 
representing  at  least  one-fifth  of  the  capital  of  the  company. 

Art.  7-J-.  All  general  provisions  of  Title  VI,  relative  to  stockholders5 
meetings,  not  inconsistent  with  those  contained  in  this  title,  shall  be 
applicable  to  meetings  of  stockholders  for  organization,  except  that 
meetings  for  organization  may  be  called  by  a  notice  inserted  in  a  news- 
paper in  which  legal  notices  are  published  in  Paris,  as  follows:  For 
the  first  meeting,  two  days  beforehand,  and  for  the  second  meeting  at 
least  ten  days  beforehand. 

Art.  75.  When  the  amounts  expended,  as  well  for  the  work  done 
upon  the  canal  as  for  the  discharge  of  the  burdens  resulting  from  the 
contribution  of  M.  Gautron,  shall  reach  about  one-half  of  the  cash 
capital  of  the  company  at  the  minimum,  a  special  technical  commission, 
theretofore  appointed  at  a  proper  time  shall  pronounce  upon  the 
results  obtained  from  the  work  already  done  and  upon  the  conclusions 
to  be  drawn  therefrom  as  to  the  remainder  of  the  enterprise. 

The  commission  shall  be  composed  of  2  members,  appointed  by  the 
council  of  administration  of  the  present  company,  and  of  2  persons 
appointed  by  the  liquidation  of  the  old  Compagnie  tJniverselle  du  Canal 
Interoceanique.    These  4  members  shall  appoint  a  fifth,  who  shall  be 


212 


PANAMA  CANAL  TITLE* 


president  of  the  commission,  and  if  they  can  not  agree,  this  president 
shall  be  appointed  by  the  president  of  the  tribunal  of  commerce  of  the 
department  of  the  Seine. 

The  council  of  administration  shall  be  required  to  make  public  the 
opinion  of  this  commission,  and  to  call  a  special  meeting  of  stockholders 
in  the  manner  provided  in  articles  61  and  62  hereof. 

This  meeting  shall  consider  the  ways  and  means  tending  to  insure 
the  completion  of  the  work  and  the  stipulations  contained  in  article  5, 
section  i,  No.  3  hereof. 

Title  XII. — Publications. 

Art.  76.  Within  the  month  of  the  organization  of  the  eompany  the 
administrators  shall  tile  in  the  registry  of  the  tribunal  of  commerce  of 
the  Seine  and  of  the  justice  of  the  peace  of  the  ninth  <i  rrondisst  m<  ///of 
Paris,  1,  a  copy  of  the  articles  of  association;  2,  a  copy  of  the  docu- 
ment showing  the  subscription  of  the  capital  and  the  payment  of  one- 
fourth;  3,  a  copy,  or  a  certified  copy,  of  the  action  of  the  stockholders' 
meeting,  in  accordance  with  articles  71  and  72  hereof;  4.  a  copy,  or  a 
certified  copy,  of  the  list  of  tin4  names  of  the  subscribers. 

Art.  77.  Within  the  same  time  an  extract  from  the  documents  and 
proceedings  specified  in  the  preceding  article  shall  be  inserted  in  one 
of  the  newspapers  publishing  legal  notices  in  Paris,  in  pursuance  of 
law. 

Art.  78.  Full  powers  are  granted  the  holders  of  the  documents  for 
the  tiling  and  publication  in  question. 

Art.  79.  Finally,  it  is  noted  that  all  the  provisions  contained  in  the 
two  last  preceding  titles,  relative  to  the  organization  and  publications 
of  the  present  company,  have  been  dictated  only  by  the  requirements 
of  the  French  law  as  to  joint  stock  companies  now  in  force. 

Express  reservation  is  made  of  the  benefit  of  all  new  provisions 
which  the  legislature  may  introduce  into  the  law. 


EXHIBIT  J. 

MINUTES  OF  THE  ORGANIZATION  MEETINGS  OF  THE  NEW  PANAMA 

CANAL  COMPANY. 

On  the  22nd  of  October,  one  thousand  eight  hundred  and  ninety-four, 
Before  Me.  Felix  Edouard  Lefebvre  and  Me.  Louis  Antoine  Maurice 
Champetier  de  Ribes,  both  notaries  at  Paris,  undersigned,  has  appeared 
M.  Francois  Gustave  Ramet,  former  President  of  the  Tribunal  of 
Commerce,  of  Rennes,  residing  at  Paris,  Rue  Demours,  No.  83,  acting 
in  the  capacity  of  founder  of  the  Compagnie  Nouvelle  du  Canal  de 
Panama,  with  a  capital  of  65,000,000  francs,  whose  principal  office  has 
been  provisionally  tixed  at  Rue  de  la  Victorie,  No.  63  bis,  and  whose  by- 
laws have  been  settled  in  accordance  with  a  document  executed  before 
Me.  Lefebvre  and  Maurice  Champetier  de  Ribes,  notaries  undersigned, 
the  26th  day  of  June,  1894,  and  followed  try  a  declaration  of  subscrip- 
tion and  payment  before  the  same  notaries,  the  29th  of  September  last, 
the  particulars  of  which  appear  above,  who,  by  these  presents  deposits 
with  Lefebvre,  notary  undersigned,  and  has  requested  him  to  enter 


PANAMA  CANAL  TITLE. 


213 


upon  his  minutes,  under  date  of  this  day,  in  order  that  all  extracts  and 
copies  which  may  be  needed  may  be  issued,  to-wit: 

L.  The  original,  certified  by  the  officers,  of  the  minutes  under  date 
of  t lie  fourth  of  October  instant,  of  the  first  organization  meeting  of 
the  shareholders  of  the  anonymous  company.  Compagnie  Nouvelle  du 
Canal  de  Panama 

It  appears  from  these  minutes: 

That  the  meeting  of  shareholders  after  having  heard  read  the  by-laws 
and  the  declaration  of  subscription  and  payment,  has  declared  that  it 
accepts  the  declaration  of  subscription  and  payment,  as  made  in  good 
faith,  and  has  declared  that  the  sum  of  the  payments  made  by  the 
shareholders  had  been  made  in  cash,  and  deposited  in  caisse  des 
consignations; 

And  that,  after  haying  considered  the  matter,  the  meeting  had 
appointed  as  commissaires: 

M.  Pierre  Edouard  Fougeu,  former  notary,  and  Vice  President  of 
the  Committee  of  Bondholders,  of  Orleans,  residing  at  Orleans,  Boule- 
vard Alexandre  Martin,  No.  65, 

M.  Charles  Florian  Goudchaux,  Chief  of  Division  in  the  Depart- 
ment of  Posts  and  Telegraphs,  retired,  residing  at  Paris,  Rue  Lafayette, 
No.  119, 

And  M.  Jean  Baptiste  Georges  Focke,  manager  of  the  newspaper 
"L'Avenir  Industriel  et  Commercial residing  at  Paris,  rue  Cau- 
martin  No.  26, 

Who  were  directed  to  appraise  the  value  of  the  contributions  made 
by  M.  Gautron,  liquidator  of  the  Compagnie  Universelle  du  Canal 
Interoceanique  de  Panama,  and  the  benefits  provided,  as  well  in  con- 
sideration of  these  contributions  as  for  the  benefit  of  the  administra- 
tors, and  generally  to  fulfill  the  duties  fixed  by  law  and  the  by-laws; 

To  these  minutes  are  annexed: 

A  copy  of  the  newspaper  '*Les  Petites  Affiches",  issue  of  Sunday, 
September  30th  last,  containing  the  notice  of  calling  of  the  first  organ- 
ization meeting  of  stockholders,  said  copy  recorded  and  certified; 

The  attendance  sheet,  signed  by  each  member  upon  his  arrival,  and 
certified  by  the  officers,  with  one  hundred  and  eleven  proxies,  given 
by  different  shareholders,  and  two  copies  made  by  Messrs.  Lefebvre 
and  Portefin,  notaries  at  Paris,  of  powers  of  attorney  given  by  the 
Credit  Lyonnais  to  M.  Rabeau  and  by  the  societe  Generale  to  M. 
de  Fredaignes; 

II.  And  the  original,  certified  by  the  officers,  of  the  minutes,  under 
date  of  the  20th  of  October  instant,  of  the  second  organization  meeting 
of  shareholders  of  the  said  Company. 

It  appears  from  these  minutes: 

That  the  shareholders'  meeting  approved,  by  the  unanimous  vote  of 
the  members  present,  except  only  M.  Gautron  and  the  Commissioners, 
who  did  not  vote,  the  report  printed  and  deposited  at  the  main  office 
on  the  13th  inst.  by  Messrs.  Fougeu,  Goudchaux  and  Focke.  Commis- 
sioners appointed  by  the  first  organization  meeting  of  shareholders  of 
the  fourth  of  October,  instant,  adopts  the  conclusion  of  this  report, 
and  accordingly  says  that  it  approves  the  provisions  made  and  benefits 
provided  in  consideration  of  the  contribution  of  M.  Gautron,  and  for 
the  benefit  of  the  administrators  by  the  by-laws; 

That  said  meeting  decided,  by  unanimous  vote  of  the  members  pres- 
ent, that  the  attendance  pay  of  the  council  of  administration  should 


214 


PANAMA  CANAL  TITLE. 


be  fixed  at  the  sum  of  three  thousand  francs  for  each  acting  adminis- 
trator per  annum,  leaving  to  the  council  to  divide  the  total  between  it  s 
members  in  conformity  with  the  business  to  each  of  them;  and  at  two 
thousand  francs  tor  each  period,  the  compensation  to  he  allotted  to 
each  of  the  commissaires  of  accounts; 

That  the  meeting,  after  due  consideration,  decided  unanimously, 
with  the  exception  of  two  persons,  one  having  ten  yotes,  and  the  other 
eighteen, 

That  the  council  of  administration  should  be  fixed  for  the  present  at 
ten,  and  appoints  to  till  these  offices  for  the  first  period  of  six  years; 

M.  Theophile  Auguste  Baillet,  merchant,  former  Judge  of  Tribu- 
nal of  Commerce  of  Orleans, residing  at  Orleans,  rue Dauphine  No.  L3; 

M.  Jean  Bonnardel,  administrator  of  the  Compagnie  des  chemins 
de  fer  de  l'Ouest,  residing  at  Lyons,  quai  d'Occident,  No.  3; 

M.  Georges  Brolemann  administrator  of  the  Credit  Lyonnais,  resid- 
ing at  Paris,  Boulevard  Malesherbes,  No.  52; 

M.  Calixte  Carraby,  administrator  of  the  Comptoir  National  d'Es- 
compte,  residing  at  Paris,  Hue  Pigalle,  No.  14; 

M.  Gabriel  Francois  Chanove,  administrator  delegate  of  the  Societe 
des  Forges  et  Acierics  de  Huta  Bankowa,  residing  at  Paris,  rue  de 
Prony,  No.  (.C>; 

M.  Gabriel  Jules  Jonquiere,  former  Inspector  of  public  lands, 
residing  at  Paris,  rue  Spontini  No.  1; 

M.  Augustin  Aime  Le  Begue,  administrator  of  the  Societe  G6n- 
erale.  residing  at  Paris.  Boulevard  Malesherbes  No.  81; 

M.  Francois  Gustave  Ramet,  former  President  of  the  Tribunal  of 
Commerce  of  Rennes,  residing  at  Paris,  rue  Demours  No.  83; 

M.  de  Saint  Quentin  Marcel  Pierre  Acheman,  administrator  of  the 
Credit  Industriel  et  Commercial,  residing  at  Paris,  Boulevard  des 
Batignolles,  No.  82; 

M.  Lucien  Souchon,  administrator  of  the  Societe  des  Houilleres  de 
Saint  Etienne  residing  at  Lyon  Place  de  la  Charite; 

And  that  in  case  M.  Saugnier,  previously  proposed,  should  not 
change  his  decision,  it  invited  the  council  to  consider  at  the  next  share- 
holders' meeting,  the  desire,  expressed  hy  it,  to  see  added  to  the  list 
of  the  council  an  authorized  representative  of  the  bondholders  of  the 
old  company; 

That  said  meeting  recognized  the  acceptance  of  said  duties  of 
directors; 

That  said  meeting,  after  due  consideration,  appointed  unanimously, 
with  the  exception  of  one  shareholder,  having  ten  votes,  commissaires 
to  report  to  the  shareholders'  meeting  on  the  accounts  of  the  first  cor- 
porate fiscal  period,  and  on  the  situation  of  the  company : 

M.  Auguste  Louis  Joseph  Barbier,  Auditor  of  the  Tribunal  of 
Commerce  of  the  Seine,  residing  at  Paris,  Avenue  de  la  Republic] ue, 
No.  12; 

M.  Auguste  Etienne  Lemoine,  Associate  Agent  de  change,  residing 
at  Paris,  rue  de  la  Pompe,  No.  10; 

And  M.  Pierre  Edouard  Fougeu,  former  notary,  and  Vice  Presi- 
dent of  the  Committee  of  Bondholders  of  Orleans,  residing  at  Orleans. 
Boulevard  Alexandre  Martin,  No.  65; 

That  it  recognized  the  acceptance  of  said  duties  by  the  commissioners 


PANAMA  CANAL  TITLE.  215 

And  that  the  company  was  declared  formally  organized,  in  con- 
formity with  the  law  and  the  by-laws. 
To  these  minutes  are  annexed; 

A  copy  of  the  newspaper  "Les  Petites  Affiches",  issue  of  Tuesday, 
the  9th  of  October  last,  containing  the  notice  of  the  calling  of  the 
second  organization  meeting  of  stockholders,  said  copy  recorded  and 
certified; 

The  attendance  sheet,  signed  by  each  member  on  his  arrival,  and 
certified  by  the  officers,  with  two  hundred  and  sixteen  stamped  mem- 
oranda, signed  by  the  proxies  of  the  absent  shareholders,  and  three 
thousand  and  ninety-one  powers  of  attorney  in  support  of  said 
memoranda: 

A  copy  of  the  report  of  the  commissaires,  certified  by  them  as 
true; 

A  power  of  attorney,  given  by  the  administrators  and  the  commis- 
sioners to  M.  Ramet,  to  accept  the  duties  of  administrators  and  of 
commissaires. 

Which  minutes  have  been  hereto  annexed,  after  having  been  certified 
as  true  by  the  party  appearing,  and  that  mention  above  of  this  annex- 
ing was  made  and  signed  by  the  undersigned  notaries. 

Reference  to  these  presents  are  allowed  wherever  necessary. 

And  for  the  making  of  the  filing  and  publication  prescribed  by  law, 
full  power  is  given  to  the  holder  of  a  copy  of  this  document. 

Done  and  passed  at  Paris,  Rue  Tronchet,  No.  31,  in  the  office  of  M. 
Lefebvre,  one  of  the  notaries  undersigned. 

The  day,  month  and  year  above  mentioned. 

And  the  same  having  been  read,  the  party  appearing  has  signed  with 
the  notaries. 

The  signatures  follow. 
On  the  margin  is  written: 

Recorded  at  Paris,  Fourth  Bureau,  the  29th  of  October,  one  thousand 
eight  hundred  and  ninety-four,  Fol.  82,  case  7,  3  francs  seventy-five 
centimes,  decimes  included. 

(Signed)  Copin. 


Appendix, 
new  panama  canal  company. 
Anonymous  company  wTith  capital  of  65,000,000  francs. 
Principal  office  at  Paris,  rue  de  la  Victoire  No.  63  bis. 

First  meeting  of  shareholders,  for  the  organization  of  the  company. 

In  the  year  one  thousand  eight  hundred  and  ninety-four,  Thursday 
the  fourth  of  October,  at  half-past  ten  o'clock  in  the  forenoon, 

The  shareholders  of  the  Compagnie  Nouvelle  du  Canal  de  Panama, 
an  anonymous  company,  with  a  capital  of  sixty- five  million  francs, 
whose  principal  office  is  at  Paris,  rue  de  la  Victoire,  No.  63  bis, 

The  said  company,  formed  by  M.  Francois  Gustave  Ramet,  former 
President  of  the  Tribunal  of  Commerce  at  Rennes,  residing  at  Pari-. 


216 


PANAMA  CANAL  TITLE. 


rue  Demours,  No.  83,  according  to  a  document  executed  before  Messrs. 
Lefebvre  and  Maurice  Champetier,  notaries  at  Paris,  the  twenty-sixth 
of  June,  one  thousand  eight  hundred  and  ninety-four. 

Met  in  first  organization  meeting  of  shareholders  at  Paris,  rue  de 
Lanery,  No.  10,  at  the  building  of  the  Union  Nationale  de-  Cnambres 
Syndicates,  on  the  call,  addressed  to  them  by  the  insertion  in  the  gen- 
eral paper  for  advertisements,  issue  of  Sunday,  the  thirtieth  of  Sep- 
tember, one  thousand  eight  hundred  and  ninety-four,  called  the 
"Petites  Affiches". 

This  meeting  is  for  this  purpose: 

1st.  Of  verifying  the  correctness  of  the  declaration  of  subscription 
and  payment  made  in  accordance  with  document  executed  before 
Messrs.  Lefebvre  and  Maurice  Champetier  de  Ribes,  notaries  at  Paris, 
the  twenty-ninth  of  September,  one  thousand  eight  hundred  and 
ninety-four, 

2d.  And  of  appointing  one  or  more  commissaires  for  the  purpose 
of  appraising  tin1  value  of  the  contributions  made  by  M.  Gautron,  as 
liquidator  of  the  Compagnie  Universelle  du  Canal  Interoc6anique  de 
Panama,  and  the  provisions  made  and  benefits  provided,  in  considera- 
tion of  said  contributions,  and  for  the  benefit  of  the  administrators; 
and  of  making  a  report  to  the  second  organization  meeting  of  share- 
holders. 

M.  Gautron  is  requested  to  fill  the  office  of  president,  which  he 
states  that  he  accepts. 

He  asks  to  assist  him  as  scrutators,  in  default  of  the  acceptance  of 
larger  subscribers: 

M.  Gabriel  Chanove,  Civil  Engineer,  residing  at  Paris,  rue  de 
Prony  No.  95, 

And  M.  Francois  Gustave  Ramet,  founder  of  the  company. 

Both  subscribers  for  two  hundred  and  fifty  shares. 

In  consequence  Messrs.  Chanove  and  Ramet  are  appointed  scrutators, 
and  accept  these  offices. 

The  President  and  scrutators  appoint  to  the  office  of  secretary  M. 
Theophile  Auguste  Baillet,  merchant,  former  Judge  of  the  Tribunal 
of  Commerce  of  Orleans,  residing  at  Orleans,  rue  Dauphine  No.  13, 
who  accepts  and  takes  his  place  at  the  desk  in  this  capacit}T. 

The  officers  thus  appointed  certified  the  attendance  sheet,  signed  by 
each  member  on  his  arrival. 

This  sheet  shows  the  presence,  personally  or  by  proxy,  of  share- 
holders representing  three  hundred  and  seventy-two  thousand,  nine 
hundred  and  sixty  shares,  viz,  more  than  one-half  the  corporate  capital, 
and  giving  a  right  to  one  thousand  and  thirty-two  votes. 

Consequently,  the  president  announces  the  regularity  of  the  meet- 
ing, and  declares  it  open. 

The  president  lays  before  the  meeting: 

1st.  A  copy  of  the  paper  for  judicial  and  legal  notices,  uLes  Petites 
Affiches,"  issue  of  twent}-ninth  of  September  one  thousand  eight 
hundred  and  ninet}T-f our,  bearing  the  number  two  hundred  and  seventy- 
three,  said  copy  recorded,  containing  the  notice  of  the  calling  together 
of  the  subscribers  to  the  shares  of  the  Compagnie  Nouvelle  du  Canal 
de  Panama,  in  first  organization  meeting  of  shareholders. 

The  president  requests  M.  Lefebvre,  Notary  of  Paris,  Dresent  at 
the  meeting,  to  read: 

1st:  The  b}T-laws  of  the  company,  according  to  document  executed 


PANAMA  CANAL  TITLE. 


217 


before  him  and  M.  Maurice  Champetier  de  Ribes,  the  twenty-sixth  of 
Juno,  one  thousand  eight  hundred  and  ninety-four; 

2d.  And  the  declaration  of  subscription  and  payment  of  the  corpo- 
rate capital  in  cash,  executed  before  Messrs.  Lefebvre  and  Maurice 
Champetier  de  Ribes,  notaries  at  Paris,  twenty-ninth  September,  one 
thousand  eight  hundred  and  ninety-four. 

These  two  documents  are  read  to  the  meeting. 

This  reading  being  finished,  the  president  states  that  the  meeting 
is  called  upon  to  consider  and  vote  on  the  following  resolutions,  which 
he  reads: 

FIRST  RESOLUTION. 

The  meeting,  after  having  read  the  by-laws,  prepared  ])y  Messrs. 
Lefebvre  and  Maurice  Champetier  de  Ribes,  notaries  of  Paris,  the 
twenty-sixth  day  of  June,  one  thousand  eight  hundred  and  ninet}r- 
four,  and  the  declaration  of  subscription  and  payment,  executed 
before  the  same  notaries  the  twenty-ninth  of  September,  one  thousand 
eight  hundred  and  ninety-four,  declares  that  it  recognizes  the  correct- 
ness of  this  declaration  of  subscription  and  pajmient,  and  that  it  finds 
that  the  amount  of  payments  made  by  the  shareholders  has  been  paid 
in  cash,  and  deposited  with  the  caisse  des  depots  et  consignations. 

This  resolution  is  passed  unanimously  by  show  of  hands. 

Thereupon,  the  president  requests  the  assembly  to  appoint  three 
commissaires,  whose  duty  will  be  to  appraise  the  value  of  the  con- 
tributions made  to  the  company  by  the  liquidation  of  the  Compagnie 
Universelle  du  Canal  Interoceanique  de  Panama,  as  well  as  the  provi- 
sions made  for  the  benefit  of  the  liquidation,  in  consideration  of  the  said 
contributions,  as  well  as  the  benefits  provided  by  the  by-laws,  for  the 
benefit  of  the  administrators,  and  to  make  to  the  second  organization 
meeting  of  shareholders,  the  report  prescribed  by  law  and  the  by-laws. 

And  he  explains  that  these  contributions  and  benefits  result  from 
Articles  five,  six,  eight  and  fifty-one  and  fifty-two  of  the  by-laws,  pre- 
vious^ read. 

The  president  observes,  furthermore,  that  he  cannot  personally  take 
part  in  the  voting. 

After  an  exchange  of  explanations,  and  the  proposal  of  various  names 
successively  put  to  vote,  the  president  puts  to  vote  the  following  resolu- 
tion, which  he  reads: 

SECOND  RESOLUTION. 

The  meeting,  after  due  deliberation,  appoints  as  commissaires: 
M.  Pierre  Edouard  Fougeu,  former  notary,  and  Vice  President  of 
the  Committee  of  Bondholders,  of  Orleans,  residing  at  Orleans,  Boule- 
vard Alexandre  Martin,  No.  65; 

M.  Charles  Florian  Goudchaux,  Chief  of  Division  in  the  Depart- 
ment of  Posts  and  Telegraphs,  retired,  residing  at  Paris,  Rue  Lafayette, 
No.  119; 

And  M.  Jean  Baptiste  Georges  Focke,  manager  of  the  newspaper 
"  L'Avenir  Industrie!  et  Commercial,"  residing  at  Paris,  Rue  Caumar- 
tin  No.  26; 

Who  are  directed  to  appraise  the  value  of  the  contributions  made 
by  M.  Gautron,  liquidator  of  the  Compagnie  Universelle  du  Canal 


218 


PANAMA  CANAL  TITLE. 


Interoceanique  do  Panama,  and  the  benefits  provided,  as  well  in  con- 
sideration of  these  contributions  as  for  the  benefit  of  the  adminis- 
trators, and  generally  to  fulfill  the  duties  fixed  by  the  Law  and  the  In  - 
laws. 

This  resolution,  put  to  vote,  is  passed  by  show  of  hands. 

Messrs.  Fougeu,  Goudchaux  and  Fock6,  being  present,  state  thai 
they  accept  the  said  offices. 

The  president  requests  the  commissioners  to  prepare  their  reporl  in 
the  shortest  possible  time,  and  reminds  them  that  it  must  he  kept  for 
the  inspection  of  the  shareholders  at  the  company's  office,  five  days 
before  the  second  meeting  of  shareholder-. 

After  which  the  president  declares  the  meeting  adjourned. 

There  have  been  annexed  to  the  present  minutes: 

A  copy  of  the  newspaper  "Les  Petites  Affiches,"  issue  of  Sunday, 
the  thirtieth  of  September  last,  containing  notice  of  the  calling  of  the 
present  meeting,  said  copy  recorded  and  certified; 

The  attendance  sheet,  signed  by  each  member  on  his  arrival,  certified 
by  theofficers,  with  one  hundred  and  eleven  proxies,  given  by  different 
shareholders,  and  two  copies,  delivered  by  Messrs.  Lefebvre  and 
Portefin,  notaries  at  Paris,  of  powers  of  attorney,  given  by  the  Credit 
Lyonnais  to  M.  Rabeau,  and  by  the  Soci^te*  (ienerale  to  ]\J.  de 
Fredaignes. 

Of  all  the  matters  set  forth  above,  these  present  minutes  have  been 
prepared,  which  have  been  signed  by  the  officers  of  the  company. 

The  President  (signed)  Gautron. 
A  scrutator  (signed)  Chaxove, 
A  scrutator  (signed)  Ramet, 
The  Secretary  (signed)  Aug.  Baillet. 
Thereafter  is  written, 

Recorded  at  Paris, 
Fourth  Bureau,  twenty-ninth  October  one  thousand  eight  hundred 
and  ninety-four,  folio  eigtnVv-three,  case  three,  received  three  francs 
seventy-five  centimes,  decimes  included. 

^Signed)  Copin. 


NEW  PANAMA  CANAL  COMPANY. 

Anonymous  company  with  capital  of  65,000,000  francs. 
Principal  office  at  Paris,  rue  de  la  Victoire  No.  63  bis. 

Second  meeting  of  shareholders,  for  the  organization  of  the  company. 

In  the  year  one  thousand  eight  hundred  and  ninety-four,  Saturday 
the  twentieth  of  October  at  half-past  two  o'clock,  in  the  afternoon, 

The  shareholders  of  the  Compagnie  Nouvelle  du  Canal  de  Panama, 
an  anon3Tmous  compamT,  with  a  capital  of  sixty-live  million  francs, 
whose  principal  office  is  at  Paris,  rue  de  la  Victoire,  No.  63  bis, 

The  said  company,  formed  by  M.  Francois  Gustave  Ramet,  former 
president  of  the  Tribunal  of  Commerce  at  Rennes,  residing  at  Paris, 


PANAMA  CANAL  TITLE. 


219 


rue  Demours,  No.  83,  in  accordance  with  document  executed  before 
Messrs.  Lefebvre  and  Maurice  Champetier,  notaries  at  Paris,  the 
twenty-sixth  of  June,  one  thousand  eight  hundred  and  ninety-four, 

Met  in  second  organization  meeting  of  shareholders  at  Paris,  in  the 
room  of  the  Societe  d'Horticulture  de  France,  rue  Grenelle,  No.  84, 
on  a  call  which  was  addressed  to  them,  by  insertion  in  the  general 
paper  for  advertisements,  issue  of  Tuesday,  ninth  of  October,  one 
thousand  eight  hundred  and  ninety-four,  called  "Petites  Affiches." 

The  purpose  of  this  meeting  is: 

To  hear  read  tin1  report  of  the  commissioners  appointed  by  the  first 
organization  meeting  of  shareholders  as  to  the  value  of  the  contribu- 
tions made  to  the  company  by  M.  Gautron,  in  his  capacity  of  liqui- 
dator of  the  Compagnie  Universelle  du  Canal  Interoc^anique  de 
Panama,  and  the  provisions  and  benefits  stipulated,  as  well  in  consid- 
eration of  the  said  contributions,  as  for  the  benefit  of  the  administra- 
tors, and  to  take1  action  upon  the  conclusions  of  said  report; 

To  appoint  administrators  of  the  Company,  and  to  ascertain  their 
acceptance; 

To  fix  the  amount  of  the  attendance  fee  allotted  to  the  administra- 
tors, and  the  remuneration  awarded  to  the  commissaires; 

And  to  declare,  if  such  be  the  case,  that  the  company  is  formally 
organized. 

M.  Georges  Lemarquis,  mandataire  of  the  Panama  bondholders, 
and  member  of  the  meeting,  is  requested  to  take  the  office  of  presi- 
dent, which  he  states  that  he  accepts. 

He  requests  to  assist  him,  as  tellers,  in  default  of  the  acceptance  of 
larger  subscribers: 

M.  Simon  Edouard  Joy  ant,  rentier,  residing  at  Paris,  Boulevard 
Malesherbes  No.  97, 

And  M.  Abel  Adrien  Alexis  Couvreux,  contractor  for  public  works, 
residing  at  Paris,  rue  d'Anjou  No.  78, 

Subscribers,  the  first  to  eight  hundred  and  twenty-six  shares,  and  the 
second  to  six  hundred  and  twenty-live  shares. 

Accordingly,  Messrs.  Joyantand  Couvreux  are  appointed  tellers,  and 
accept  these  offices. 

The  president  and  the  tellers  appoint  to  the  office  of  Secretary  M. 
Theophile  Auguste  Baillet.  merchant,  former  Judge  of  Tribunal  of 
Commerce  of  Orleans,  residing  at  Orleans,  rue  Dauphine  No.  13,  who 
accepts,  and  takes  his  place  at  the  desk  in  this  capacity. 

The  officers  thus  constituted,  certify  the  attendance  sheet  signed  by 
each  member  on  arrival. 

This  sheet  shows  the  presence  in  person,  or  by  proxy,  of  shareholders 
representing  rive  hundred  and  twenty-three  thousand  six  hundred  and 
forty-eight  shares,  say  more  than  one-half  of  the  corporate  capital,  and 
giving  a  right  to  four  thousand  eight  hundred  and  seventy-six  votes. 

Accordingly,  the  president  declares  the  meeting  regular,  and  states 
the  meeting  is  open. 

The  commissioners  appointed  by  the  first  meeting  of  shareholders, 
take  the  floor  and  read  their  report. 

This  report  concludes  by  approving  the  provisions  made  in  the  by-laws 
in  favor  of  M.  Gautron,  in  consideration  of  the  contributions  made  b}T 
him,  as  liquidator  of  the  Compagnie  Universelle  du  Canal  Interocean- 
ique  de  Panama,  and  for  the  benefit  of  the  administrators. 


220 


PANAMA   CANAL  TITLE. 


The  president,  after  having  furnished  the  assembly  various  addi- 
tional explanations,  and  having  ascertained  that  no  shareholder  asks 
the  floor,  puts  to  vote  the  following  resolutions: 

FIKST  RESOLUTION. 

The  meeting,  after  having  informed  itself  concerning  the  report 
printed  and  tiled  in  the  oflice  of  the  company  the  thirteenth  of  October 
instant,  by  Messrs.  Fougeu,  Goudchaux  and  Focke,  commissioners 
appointed  by  the  first  organization  meeting  of  commissioners  of  Octo- 
ber fourth  instant,  adopts  the  conclusions  of  its  report,  and  conse- 
quently declares  that  it  approves  the  provisions  and  benefits  stipulated 
in  consideration  of  the  contribution  of  M.  Gautron,  and  for  the 
benefit  of  administrators,  by  the  by-laws. 

This  resolution  is  passed  unanimously  by  the  members  present,  with 
the  exception  of  only  M.  Gautron  and  the  commissioners,  who  state 
that  they  do  not  vote. 

The  president  next  asks  the  meeting  to  fix  the  value  of  the  attend- 
ance tickets  to  be  issued  to  the  administrators  and  the  compensation 
of  the  commissioners. 

After  exchange  of  explanations,  the  president  puts  to  vote  the 
following  resolution : 

SECOND  RESOLUTION. 

The  meeting  decides  that  the  attendance  fees  of  the  council  of  admin- 
istrators shall  be  fixed  at  the  sum  of  three  thousand  francs  for  each 
acting  administrator  per  annum,  leaving  to  the  council  to  distribute  the 
total  among  its  members,  according  to  the  employment  to  each  of 
them,  and  at  two  thousand  francs  for  each  fiscal  period  the  compen- 
sation to  be  allotted  to  each  of  the  commissioners  of  accounts. 

This  resolution  is  passed  unanimously  by  the  members  present. 

The  president  next  requests  the  meeting  to  appoint  the  administra- 
tors of  the  company  for  the  first  period  of  six  }Tears,  in  comformity 
with  the  by-laws,  and  informs  the  meeting  that  a  list  of  eleven  persons 
had  been  presented  to  him,  which  he  reads  to  the  meeting. 

Mr.  Saugnier,  former  treasurer  paymaster  general  of  the  Depart- 
of  the  Loire,  mentioned  in  this  list,  states  that  he  declines  the  duties 
which  are  offered  him,  and  refuses  to  be  a  candidate. 

The  president  expresses  a  desire  that  Mr.  Saugnier  should  re-con- 
sider his  decision. 

He  then  opens  the  debate  as  to  the  choice  of  administrators. 

Mr.  Georges  Thiebaud,  member  of  the  meeting,  offers  several  obser- 
vations as  to  the  character  of  the  list  presented,  and  the  incompatibility 
which  may  exist  between  the  duties  of  administrators  of  the  financial 
companies,  borne  by  several  of  the  candidates  proposed,  and  the  duties 
of  the  administrators  of  the  company. 

Mr.  Focke  proposes  to  the  meeting  several  names  which  he  would 
desire  to  see  added  to  the  list. 

The  President  explains  to  the  meeting  that  the  list  was  made  up  by 
agreement  between  the  persons  who  compose  it,  and  forms  a  homo- 
geneous whole,  which  it  is  difficult  to  change  without  the  consent  of  its 
members. 

He  reserves,  however,  to  the  council,  the  power  of  completing  itself 
in  conformity  with  the  wishes  of  the  meeting,  and  with  the  by-laws. 


PANAMA  CANAL  TITLE. 


221 


After  further  exchange  of  explanations,  in  which  Mr.  Georges 
Thiebaud  takes  part,  the  president  puts  to  vote  the  following  resolu- 
tion. 

THIRD  RESOLUTION. 

The  meeting,  after  due  consideration,  in  conformity  with  article 
twcnt3T-two  of  the  b}T-laws,  decides  that  the  council  of  administration 
be  fixed  for  the  present  at  ten,  and  appoints  to  till  the.se  offices  during 
the  first  period  of  six  years, 

Mr.  Theophile  Auguste  Baillet,  merchant,  former  Judge  of  the 
Tribunal  of  Commerce  of  Orleans,  residing-  at  Orleans,  rue  Dauphine 
No.  13. 

Mr.  Jean  Bonnardel,  administrator  of  the  Compagnie  des  chemins 
de  fer  de  L'Ouest,  residing  at  Lyons,  qua!  d'Occident,  No.  3. 

Mr.  Georges  Brolemann,  administrator  of  the  Credit  Lyonnais,  resid- 
ing at  Paris,  Boulevard  Malesherbes,  No.  52. 

Mr.  Calixte  Carraby,  administrator  of  the  Comptoir  National  d'Es- 
compte,  residing  at  Paris  Rue  Pigalle,  No.  14. 

Mr.  Gabriel  Francois  Chanove.  administrator  delegate  of  the  Societe 
des  Forges  et  Acieries  de  Huta  Bankowa.  residing  at  Paris,  rue  de 
Prony,  No.  95. 

■  Mr.  Gabriel  Jules  Jonquiere,  former  Inspector  of  public  lands, 
residing  at  Paris,  rue  Spontini  No.  1. 

Mr.  Augustin  Aime  Le  Begue,  administrator  of  the  Societe  Gen- 
erale,  residing  at  Paris,  Boulevard  Malesherbes  No.  81. 

Mr.  Francois  Gustavo  Ramet,  former  President  of  the  Tribunal  of 
Commerce  of  Rennes,  residing  at  Paris,  rue  Demours  No.  83. 

Mr.  Marcel  Pierre  Acheman  de  Saint  Quentin,  administrator  of  the 
Credit  Industriel  et  Commercial,  residing  at  Paris,  Boulevard  des 
Batignolles,  No.  82. 

Mr.  Lucien  Souchon,  administrator  of  the  Societe  des  Houilleres  de 
Saint  Etinne,  residing  at  Lyon,  Place  de  la  Charite. 

And  in  case  Mr.  Saugnier,  heretofore  suggested,  should  not  recon- 
sider his  decision,  the  meeting  requests  the  Council  to  consider  at  the 
time  of  the  next  shareholders'  meeting  the  desire  expressed  by  it,  of 
seeing  added  to  the  list  of  the  Council  an  authorized  representative  of 
the  security  holders  of  the  old  company. 

This  resolution  is  passed,  unanimously  with  the  exception  of  two 
persons,  who,  upon  being  questioned,  state  that  one  possesses  ten 
votes  and  the  other  eighteen. 

Mr.  Ramet,  as  well  in  his  own  name  personally  as  in  the  name  of 
the  administrators  elected,  states  that  they  accept  the  offices  which  are 
conferred  upon  them. 

The  president  requests  the  meeting  to  appoint  the  commissioners  to 
verify  the  accounts  for  the  first  fiscal  period,  and  suggests  to  the  meet- 
ing a  list  of  three  names,  which  is  proposed. 

He  puts  to  vote  the  following  resolution. 

FOURTH  RESOLUTION. 

The  meeting,  after  due  consideration,  appoints  Mr.  Auguste  Louis 
Joseph  Barbier,  auditor  of  the  Tribunal  of  Commerce  of  the  Seine, 
residing  at  Paris,  Avenue  de  la  Republique,  No.  12. 


222 


PANAMA  CANAL  TITLE. 


Mr.  Auguste  Eticnnc  Lcmoinc,  associate  agent  de  change,  residing 
at  Paris,  rue  de  la  Pompe,  No.  10. 

And  Mr.  Pierre  Edouard  Fougeu,  former  notary,  Vice  president  of 
the  Committee  of  Bondholders  of  Orleans,  residing  at  Orleans.  Boule- 
vard Alexandre  Martin,  No.  65, 

Commissioners  to  make  the  report  to  the  shareholders'  meeting,  on 
the  accounts  of  the  first  corporate  fiscal  period,  and  upon  the  situation 
of  the  company,  in  conformity  with  the  law  and  article  thirty-two  of 
the  by-laws. 

This  resolution  is  passed  unanimously,  with  the  exception  of  a  -hare- 
holder  having  ten  votes. 

Mr.  Ramet  states  that  he  accepts  in  the  names  of  Messrs.  Barbier 
and  Lemoine.  the  offices  which  have  just  been  conferred  upon  them. 

Mr.  Fougeu,  present  at  the  meeting,  states  that  be  accepts  also. 

In  the  course  of  this  voting,  Mr.  Georges  Thiebaud  filed  with  the 
officers  a  protest,  as  follows,  which  is  inserted  in  tin1  present  minutes, 
at  the  express  request  of  Mr.  Georges  Thiebaud,  and  subject  to  all 
reservations  on  the  part  of  the  officer-: 

Mr.  Georges  Thiebaud,  shareholder,  33  quai  Voltaire.  Paris,  protests 
in  the  most  formal  way  against  the  method  of  voting  which  has  been 
employed  for  the  election  of  the  council  of  administration,  which  was 
elected  by  count  of  the  show  of  hands  of  the  shareholders,  who  did 
not  desire  it.  Furthermore,  the  list  of  the  council,  contrary  to  the 
by-laws,  was  not  composed  of  nine,  twelve  or  fifteen  members,  but  of 
ten  and  eleven. 

Furthermore,  the  council,  instead  of  being  elected  name  by  name, 
were  elected  in  a  body,  and  decisions  upon  other  matters  were  annexed. 
(Signed)  Georges  Thiebaud. 

The  President  announces,  as  a  result  of  the  resolutions  above  adopted, 
that  the  Compagnie  Nouvelle  du  Canal  de  Panama,  is  formally  organ- 
ized in  conformity  with  the  law  and  the  by-laws. 

He  adds  a  few  words  as  to  the  formalities  which  are  to  be  imme- 
diately complied  with  to  inform  the  Government  of  Colombia  of  the 
organization  of  the  company,  and  announces  the  immediate  resump- 
tion of  work  on  the  Isthmus  of  Panama. 

DECLARATION  FOR  RECORDING. 

For  the  collection  of  the  dues  for  recording,  only,  it  is  here  declared. 

That  the  sum  of  seven  million  live  hundred  thousand  francs  to  be 
paid  to  the  Government  of  Colombia,  under  the  provisions  of  the 
concession  laws,  applies  to  the  rights  in  real  property  included  in  the 
concession  of  the  Colombian  Government,  especially  to  the  lands  in 
which  the  canal  will  be  dug,  to  the  strip  of  land  granted  on  each  of 
its  sides,  and  to  the  five  hundred  thousand  hectares  of  public  land- 
granted,  with  the  mines  which  they  may  contain. 

The  meeting  was  adjourned  at  six  o'clock. 

There  have  been  annexed  to  the  present  minutes, 

A  copy  of  the  paper  "Les  Petites  Affiches,"  issue  of  Tuesday,  ninth 
October  last,  containing  the  notice  of  the  calling  of  the  present  meet- 
ing, said  copy  recorded  and  certified. 

The  attendance  sheet,  signed  by  each  member  on  arrival,  and  certi- 
fied hy  the  officers,  with  two  hundred  and  sixteen  stamped  memoranda, 


PANAMA  CANAL  TITLE. 


223 


containing  the  details  of  the  proxies  given  by  the  shareholders  not 
present,  signed  by  the  said  proxies,  and  three  thousand  and  ninety-one 
powers  in  support  of  the  said  memoranda. 

A  copy  of  the  report  of  the  commissioners,  certified  by  them  as 
true. 

A  power  of  attorney,  given  by  the  administrators  and  commissioners 
to  Mr.  Ramet,  to  accept  their  offices. 

PUBLICATIONS. 

For  making  the  filing  and  publication  prescribed  by  law,  full  powers 
are  given  to  the  bearer  of  a  copy  of  the  documents  and  minutes  of 
organization  of  the  company. 

Of  all  which  is  above  set  forth,  the  present  minutes  have  been  pre- 
pared, which  have  been  signed  by  the  officers,  the  administrators  and 
the  commissioners,  or  their  proxies. 

The  President  (signed)  Lemarquis, 
A  Scrutator  (Signed),  Joyant, 
A  Scrutator  (Signed),  Couvreux, 
The  Secretary  (Signed),  Aug.  Baillet. 
Good  as  an  acceptance  of  the  offices  of  administrators,  both  in  my 
name  personally,  and  as  attorney  in  fact. 
Signed  Ramet. 

Good  as  an  acceptance  of  the  office  of  commissioners  for  Messrs. 
Barbie r  and  Lemoine. 
Signed  Ramet. 


Thereafter  is  written, 

"Recorded,  Paris  Fourth  Bureau,  twenty-ninth  October,  one  thou- 
sand eight  hundred  and  ninety-four,  folio  thirty-three,  case  five,  one 
hundred  and  seventy-two  thousand  five  hundred  francs,  decimes 
included. 

Signed  Copin. 


The  undersigned, 

Mr.  Theophile  Auguste  Baillet,  merchant,  former  Judge  of  the 
Tribunal  of  Commerce  of  Orleans,  residing  at  Orleans,  rue  Dauphine 
No.  13. 

Mr.  Jean  Bonnardel,  administrator  of  the  Compagnie  des  chemins 
de  fer  de  TOuest,  residing  at  Lyons,  quai  d'Occident,  No.  3. 

Mr.  George  Brolemann,  administrator  of  the  Credit  Lyonnais,  resid- 
ing at  Paris.  Boulevard  Malesherbes,  No.  52. 

Mr.  Calixte  Carraby,  administrator  of  the  Comptoir  National  d'Es- 
compte,  residing  at  Paris,  Rue  Pigalle,  No.  14. 

Mr.  Gabriel  Francois  Chanove,  administrator  delegate  of  the  Societe 
des  Forges  et  Acieries  de  Huta  Bankowa,  residing  at  Paris,  rue  de 
Prony,  No.  95. 

Mr.  Gabriel  Jules  Jonquiere,  former  Inspector  of  public  lands, 
residing  at  Paris,  rue  Spontini  No.  1. 

Mr.  Augustin  Ainu'  Le  Begue,  administrator  of  the  Societe  Gene- 
rale,  residing  at  Paris,  Boulevard  Malesherbes,  No.  81. 

And  Mr.  Marcel  Pierre  Acheman  de  Saint  Quentin,  administrator  of 


224 


PANAMA  CANAL  TITLE. 


the  Credit  Industrial  et  Commercial,  residing  at  Paris,  Boulevard  dee 
Batignolles,  No.  82. 

In  case  they  should  be  appointed  as  administrators  of  the  Compagnie 
Nouvelle  du  Canal  de  Panama  by  the  second  organization  meeting  of 
shareholders. 

Give  by  these  presents  full  power  to  Mr.  Francois  Gustave  Ramet, 
former  President  of  the  Tribunal  of  Commerce  of  Rennes,  residing  ltt 
Paris,  rue  Demours,  No.  83. 

For  the  purpose  of: 

Accepting  the  said  offices  of  administrators,  or  declining  them,  for 
each  of  them  individually. 

Paris,  twentieth  October  one  thousand  eight  hundred  and  ninety- 
four. 

Good  as  power,  (signed)  Baillet, 
Good  as  power,  (signed)  BoNNARDEL, 
Good  as  power,  (signed)  Brolemann, 
Good  as  power,  (signed)  Carraby, 
Good  as  power,  (signed)  CHANOVE, 
Good  as  power,  (signed)  Jonquiere, 
Good  as  power,  (signed)  Le  Begue, 
Good  as  power,  (signed)  de  Saint  Quentin. 
Thereafter  is  written: 

Recorded  at  Paris,  fourth  bureau,  twenty-ninth  October,  one 
thousand  eight  hundred  and  ninety-four,  folio  83,  case  10,  received 
thirty  francs,  decimes  included. 

(Signed)  Chopin. 

The  undersigned,  Lucien  Souchon,  administrator  of  the  Societe  des 
Houilleres  de  Saint  Etienne,  residing  at  Lyon,  Place  de  la  Charite. 

Gives  by  these  presents  power  to  Mr.  Francois  Gustave  Ramet, 
former  President  of  the  Tribunal  of  Commerce  of  Rennes,  residing 
at  Paris,  rue  Demours  No.  S3. 

For  the  purpose  of  accepting,  in  my  name,  the  office  of  administra- 
tor of  the  Compagnie  Nouvelle  du  Canal  de  Panama,  in  case  it  should 
be  conferred  upon  me  by  the  second  organization  meeting  of  share- 
holders. 

For  the  said  purpose,  to  sign  all  minutes. 

Lyon,  the  nineteen  of  October,  one  thousand  eight  hundred  and 
ninety-four. 

Good  as  a  power,  (Signed)  Souchon. 

Thereafter  is  written : 

Recorded  at  Paris,  fourth  Bureau,  twenty-ninth  of  October,  one 
thousand  eight  hundred  and  ninety-four,  folio  83,  case  10,  received 
three  francs,  ninteteen  centimes,  decimes' included. 

(Signed)  Chopin. 


The  undersigned, 

Mr.  Auguste  Louis  Joseph  Barbier,  auditor  of  the  Tribunal  of 
Commerce  of  the  Seine,  residing  at  Paris,  Avenue  de  la  Republique, 
No.  12. 

And  Mr.  Auguste  Etienne  Lemoine,  associate  agent  de  change, 
residing  at  Paris,  rue  de  la  Pompe,  No.  10, 
Give  by  these  presents,  power 

To  Mr.  Francois  Gustave  Ramet,  former  President  of  the  Tribunal 
of  Commerce  of  Rennes,  residing  at  Paris,  rue  Demours  No.  83. 


PANAMA   CANAL  TITLE 


225 


For  the  purpose  of  accepting  for  each  of  the  undersigned  the  offices 
of  auditing  commissioners  of  the  Compagnie  Xonvelle  du  Canal  de 
Panama,  in  case  these  offices  should  be  conferred  upon  us  by  the  sec- 
ond organization  meeting  of  shareholders  of  the  Company. 

For  the  said  purpose,  to  sign  all  the  minutes. 

Paris,  the  eighteenth  October  one  thousand  eight  hundred  and 
ninety-four. 

Given  as  a  power  (signed)  Barbier, 
Given  as  a  power  (signed)  Lemoine. 

Thereafter  is  written, 
Recorded  :it  Paris,  fourth  Bureau, 
twenty-ninth  October  one  thousand 
eight  hundred  and  ninety-four,  folio 
83,  case  10.  Received  seven  francs, 
fifty  centimes,  decimes  included. 

(Signed)  Lefebvre. 


EXHIBIT  K. 

JUDGMENT  OF  JUNE  29,  1894  (CIVIL  TRIBUNAL  OF  THE  SEINE),  APPROV- 
ING CONTRIBUTION  BY  THE  LIQUIDATOR  TO  THE  NEW  PANAMA 
CANAL  COMPANY. 

[Taken  from  the  minutes  of  the  civil  tribunal,  lower  court,  for  the  department  of  the  Seine,  sitting 

in  the  palace  of  justice,  Paris.] 

The  civil  tribunal,  lower  court,  for  the  department  of  the  Seine, 
sitting  in  the  palace  of  justice.  Paris,  has  rendered,  in  open  and  public 
session  of  its  first  division,  the  following  judgment: 

Done  at  the  sitting  of  the  29th  day  of  June,  1894. 

The  tribunal  having  examined  and  considered  the  petition  presented 
by  Gautron,  as  liquidator  of  the  court  for  the  Universal  Company  of 
the  Panama  Interoceanic  Canal,  which  petition  is  signed  by  de  Bieville, 
his  solicitor;  and  the  tribunal  having  also  examined  and  considered 
the  documents  produced,  and  the  petition  aforesaid  being  conceived  as 
follows: 

To  the  honorable  the  president  and  justices  of  the  first  division  of 
the  civil  tribunal  of  the  Seine,  the  petitioner.  M.  Jean  Pierre  Gautron, 
liquidator  of  the  court,  residing  in  Paris,  No.  13  Tronchet  street, 
represents  as  follows: 

That  he  is  acting  in  his  capacity  as  liquidator  for  the  Universal 
Company  of  the  Panama  Interoceanic  Canal,  whose  legal  residence  is  in 
Paris,  No.  63  Ms,  rue  de  la  Yictoire;  that  he  was  named  liquidator  as 
aforesaid  by  a  decree  rendered  in  chambers  by  the  civil  tribunal  of 
the  Seine  oil  the  21st  day  of  July,  1893. 

That  he,  through  his  solicitor,  M.  de  Bieville,  respectfully  states 
that  on  the  4th  day  of  February,  1889,  M.  Joseph  Brunet  was  named, 
by  recorded  decree  of  the  first  division  of  this  tribunal,  liquidator  for 
the  Universal  Company  of  the  Panama  Interoceanic  Canal,  and  was 
given  most  extensive  powers,  notably  that  of  granting,  or  making  a 
contribution  of.  either  the  whole  or  a  part  of  the  assets  of  the  company 
to  a  new  company  or  association. 

That  by  a  recorded  decree  of  this  tribunal,  rendered  in  chambers 
on  the  13th  day  of  February,  1S90,  M.  Achille  Monchicourt  was 

8T51— 02  15 


Copied  on  nineteen  pages 
and  one-half,  containing 
three  interlineations,  ap- 
proved, and  three  words 
erased. 

Lefebvke 


226 


PANAMA  CANAL  TITLE. 


named  coliquidator  for  the  said  company,  with  M.  Joseph  Brunet, 
and  was  given  the  °ame  powers,  to  use  individually  or  in  conjunction 
with  the  latter. 

That  owing  to  the  resignation  of  M.  Brunet,  M.  Achille  Monchi- 
court  has  been  confirmed,  by  a  chambers  decree  dated  the  8th  day  of 
March,  1890,  as  sole  Liquidator  for  the  said  company,  with  the  broadest 
powers,  notably  "that  of  giving  or  making  a  contribution,  to  a  new 
company  or  association,  of  either  the  whole  or  a  part  of  the  assets  of 
the  company  aforesaid;  of  entering  into  and  rectifying  with  contract- 
ors all  contracts  and  agreements  aiming  to  the  continuation  or  preserv- 
ing of  the  work,  and  of  prolonging  and  renewing  all  agreements,  of 
giving  all  guarantees,  necessary  for  this  purpose." 

Finally,  that  by  a  decree  rendered  in  chambers  on  the  21st  day  of 
July,  1893,  Jean  Pierre  Gautron  was  appointed  coliquidator  with 
M.  Achille  Monchicourt,  with  the  same  and  equal  powers,  to  use 
individually  or  jointly  v  illi  the  said  M.  Monchicourt. 

That  owing  to  the  decease  of  M.  Achille  Monchicourt.  which  occurred 
on  the  14th  day  of  March.  1894,  M.  Gautron  remains  sole  liquidator 
of  the  Panama  Innteroceanic  (anal  Company. 

That  a  new  company  is  in  process  of  formation  at  the  present  time 
for  the  purpose  of  resuming  the  work  and  completing  the  canal. 

That  the  by-laws  of  this  company,  (ailed  the  New  Panama  Canal 
Company,  have  been  drawn  up  and  deposited  for  record  by  M.  Gustave 
Ramet,  formerly  president  of  the  tribunal  of  commerce  at  Rennes, 
and  have  been  tiled  also  in  the  records  and  minutes  of  M.  Lefebvre, 
notary,  in  Paris. 

That  your  petitioner,  by  virtue  of  the  powers  conferred  by  the 
orders  and  decrees  aforesaid  on  the  liquidator  for  the  Panama  inter- 
oceanic  Canal  Company,  is  preparing  to  make  contribution  to  the  new 
company  now  being  constituted:  First,  of  all  rights  whatsoever  accru- 
ing to  the  old  company  from  the  laws  of  the  Government  of  the  United 
States  of  Colombia,  dated  May  18,  1878,  and  December  26,  1890,  as 
well  as  from  all  decrees,  acts,  or  facts  whatever  having  followed  upon 
these  laws  in  the  course  of  their  execution,  and  all  advantages  and 
benefits  accruing  therefrom  and  stipulated  by  these  laws  and  decrees, 
together  with  all  territory  and  real  estate  having  been  granted  and 
ceded  to  the  interoceanic  company  now  in  process  of  liquidation,  or 
acquired  by  the  same,  all  this  provided  the  new  company  fulfill  the 
conditions  prescribed  and  imposed  by  the  laws  and  acts  passed  in 
granting  or  extending  the  concession,  and  provided  it  pay  and  dis- 
charge all  sums  and  indebtedness  remaining  due  to  the  Colombian 
Government  by  the  old  company. 

Secondly.  Of  the  work  already  done  and  accomplished,  of  the  yards, 
workshops,  buildings,  hospitals,  plant  mounted  and  unmounted,  and 
of  the  stores,  etc.,  belonging  to  the  liquidation  as  well  as  of  all  deposits. 

Thirdly.  Of  the  plans,  estimates,  surveys,  and  specifications,  and  of 
all  documents  whatsoever  gathered  and  collected  by  the  Universal 
Company  of  the  Interoceanic  Canal,  bearing  in  any  manner  on  the 
study,  construction,  or  improvement  and  operation  of  the  canal  or  of 
its  appurtenants,  as  well  as  the  privileges  attached  to  the  same,  and  all 
contracts  or  agreements  with  third  parties. 

Fourthly.  Of  all  rights  of  any  nature  and  description,  part  owner- 
ship, or  any  other  rights  whatsoever,  which  may  belong  or  accrue  to 
the  Interoceanic  Canal  Universal  Company,  now  being  liquidated,  in 


PANAMA  CAN  A  L  TITLK. 


227 


the  Panama  Railroad  at  Colon,  now  worked  and  operated  by  an  Amer- 
ican company,  known  as  the  Panama  Railroad  Company,  whose  legal 
residence  is  in  New  York.  The  said  rights  shall  be  transferred  such 
as  they  are,  carrying  with  them  all  privileges  entailed  by  them;  and 
M.  Gautron  binds  himself,  in  his  official  capacity,  to  invest  with  them 
the  present  company  in  the  form  and  in  compliance  with  all  formali- 
ties required  for  such  transfer  by  the  laws  of  the  United  States  of 
America. 

The  said  rights  shall  be  transferred,  as  well  as  the  said  property  in 
full,  such  as  they  exist  and  with  all  that  they  entail. 
Your  petitioner  further  respectfully  shows  as  follows: 
That  the  said  grant  and  contribution  are  made,  or  are  to  be  made, 
by  him,  with  the  following-  reservations  and  under  the  following  con- 
ditions, to  wit: 

First.  The  liquidation  shall  have  and  receive  a  part  in  the  net 
profits  and  gains  of  tin1  enterprise,  amounting  to  60  per  cent  of  the  said 
profits  and  gains,  such  as  the  same  shall  be  determined  and  computed 
under  articles  51  and  52  of  the  by-laws. 

Secondly.  Fifty  thousand  shares  of  entirely  paid-up  stock  shall  be  • 
given  to  the  Government  of  the  United  States  of  Colombia,  as  pre- 
scribed by  the  extension  act  of  December  20,  1890. 

Thirdly.  The  rights  of  every  nature  and  description  belonging  to 
the  receivership  in  the  Panama  Railroad,  and  ceded  by  M.  Gautron, 
as  set  forth  in  paragraph  4  above,  shall  become  the  property  of  the 
new  company  from  the  date  of  the  meeting  provided  for  by  article  75 
of  the  constitution  and  by-laws.  No  pecuniary  compensation  is  required 
of  the  new  company  for  the  cession  of  said  rights,  but  they  are  trans- 
ferred on  the  condition  and  with  the  full  understanding  that  said  trans- 
fer shall  be  void  if  the  canal  be  not  completed  within  the  time  appointed 
by  the  grant.  Should  the  work  not  be  completed  within  the  said 
period  of  time,  the  said  rights  snail  revert  to  the  liquidation. 

If,  contrary  to  all  expectations,  the  meeting  in  question  should  fail 
to  take  the  necessary  measures  to  complete  the  canal,  or  if  the  meas- 
ures thus  taken  by  said  meeting  should  fail  of  execution,  by  reason  of 
impossibility  to  carry  them  out,  the  present  company  would  still  retain 
the  said  rights  accruing  from  the  railroad  aforesaid:  but  it  would 
have  to  pay  to  the  liquidation  a  sum  of  20,000,000  francs  as  an 
indemnity,  while  the  liquidation's  share  in  the  gains  and  profits  of 
the  new  company  would  then  be  equal  to  one-half  of  said  gains  and 
profits,  without  further  previous  deduction  than  such  as  is  provided 
for  by  paragraphs  2  and  3  of  article  51. 

Fourthly.  Until  the  full  completion  of  the  canal  M.  Gautron  shall 
have  power,  in  his  capacity  as  liquidator,  to  appoint  a  controlling  or 
supervising  committee,  composed  of  three  members  selected,  as  much 
as  possible,  from  among  the  engineers  of  bridges  and  roads  and  finance 
inspectors,  in  order  to  inspect  the  progress  of  the  work,  the  condi- 
tion and  maintenance  of  the  plant  and  of  the  real  property,  as  well  as 
the  accounts  kept  in  relation  to  these  various  objects. 

The  compensating  of  this  committee  shall  be  at  the  expense  of  the 
new  company. 

Your  petitioner  further  shows  that  it  is  proper  for  him  to  submit  to 
the  civil  tribunal  of  the  Seine,  for  ratification  and  approval,  the  con- 
ditions of  the  said  grants  and  contributions,  and  the  constitution  and 
by-laws  of  the  company  formed  for  the  completion  of  the  canal. 


228 


PANAMA  CANAL  TITLE. 


Wherefore  your  said  petitioner,  acting  in  his  official  capacity,  respect- 
fully requests  and  prays  the  honorable  president  and  associate  justices 
of  this  court  purely  and  simply  to  ratify  and  approve  the  purport  and 
conditions  of  the  grants  or  contributions  intended  to  be  made  by  the 
liquidator  for  the  Universal  Company  of  the  Panama  J nteroceanic  (  anal 
to  the  New  Panama  Canal  Company  now  in  process  of  formation,  as 
well  as  the  constitution  and  by-laws  of  the  last-mentioned  company. 

All  proper  reservations  being  made,  justice  will  be  done. 

(Signed)  A.  De  Bikville. 

Having  considered  the  order  issued  b}'  the  president  of  the  court, 
dated  the  27th  da}'  of  June,  1894.  appended  to  the  said  petition  and 
directing: 

That  this  be  communicated  to  the  commonwealth  attorney,  and  that 
Mr.  De  Boislisle,  vice-president,  is  hereby  appointed  to  make  a  report. 
Done  at  the  palace  of  justice,  Paris,  on  the  27th  day  of  June,  1894, 
and  signed  Baudouin. 

Having  considered  the  written  opinion  of  the  commonwealth  attor- 
ney, likewise  appended  to  the  said  petition,  which  opinion  is  thus  con- 
ceived: The  attorney  for  the  commonwealth  refers  the  matter  to  the 
tribunal  of  justice;  signed  Cabat. 

Having  considered  articles  10  and  11  of  the  act  of  July  1,  1893, 
which  articles  are  thus  framed: 

Art.  10.  All  acts  tending  to  alienate  any  assets  of  the  company, 
all  contracts  entailing  a  transfer  or  contribution  of  the  whole  or  of 
part  of  the  assets  of  the  concern,  emanating  from  the  liquidator  of  the 
Universal  Company  of  the  Panama  Interoceanic  Canal,  shall  be  subject 
to  the  approval  or  ratification  of  the  civil  tribunal  of  the  Seine,  who 
shall,  on  the  report  of  one  of  the  justices,  pass  on  the  question  in 
open  court. 

Art.  11.  All  decrees  of  approval  and  ratification  rendered  in  accord- 
ance with  the  preceding  article  shall  be  published  within  a  term  of 
ten  days  in  the  "Journal  Officiel"  and  in  the  "Journal  Officiel  (com- 
mune edition)." 

This  decree  may  be  attacked  by  the  shareholders,  by  the  manda- 
taire  of  the  holders,  and  by  other  creditors  of  the  company  within  a 
delay  not  exceeding  one  month  from  the  date  of  the  publication  afore- 
said. The  civil  tribunal  shall  adjudicate  the  question  within  the  space 
of  one  month,  as  in  the  case  of  matters  demanding  immediate  and 
summary  adjudication.  The  appeal  from  such  decision  must  be 
entered  within  ten  days  from  the  time  of  notification  of  said  judgment 
to  the  party  in  person  or  at  his  domicile. 

t  Having  heard  at  the  sitting  of  the  court  M.  de  Boisli.sle.  vice- 
president,  in  his  report,  and  M.  Cabat,  assistant  attorney  for  the  com- 
monwealth, in  his  opinion,  and  having  deliberated  upon  the  same  in 
accordance  with  law: 

Whereas  it  appears  from  the  terms  of  article  5  of  the  constitution 
and  by-laws  of  the  New  Panama  Canal  Company,  which  constitution 
and  by-laws  have  been  duly  acknowledged  before  Lefebvre  and  his 
colleague,  notaries  in  Paris,  under  an  act  of  June  26,  1894,  that  Gau- 
tron,  acting  in  his  official  capacity  as  liquidator  for  the  Universal  Com- 
pany of  the  Panama  Interoceanic  Canal,  has  declared  himself  as  ceding 
or  contributing  to  the  said  company  newly  formed: 

First.  All  rights  whatsoever  accruing  to  the  old  company  by  virtue 


PANAMA  CANAL  TITLE. 


229 


of  the  laws  of  the  Government  of  the  United  States  of  Colombia, 
dated  May  18,  L878,  and  December  26,  L890,  as  well  as  those  accruing 
from  all  decrees,  acts,  or  facts  having  followed  upon  these  laws  in 
the  course  of  their  execution,  and  all  advantages  accruing  there- 
from and  stipulated  by  these  laws  and  decrees;  together  with  all 
territory  and  real  estate  granted  and  ceded  unto  the  interoceanic  com- 
pany now  in  process  of  liquidation,  or  acquired  by  the  same:  all  this 
provided  the  new  company  fulfill  the  conditions  prescribed  and 
imposed  by  the  laws  and  acts  passed  in  prolongation  or  extension  of 
the  grant,  and  provided  it  discharge  and  pay  all  sums  and  indebtedness 
remaining  due  to  the  Colombian  Government  by  the  old  company. 

Secondly.  The  work  already  done  and  accomplished,  the  plants, 
workshops,  buildings,  hospitals,  plant  mounted  and  unmounted,  and 
the  stores,  etc.,  belonging  to  the  liquidation  of  the  Universal  Com- 
pany of  the  Panama  Interoceanic  Canal,  as  well  as  all  deposits  which 
may  have  been  made1  by  the  said  company  now  in  process  of  Liquidation. 

Thirdly.  The  plans,  estimates,  surveys,  and  specifications,  and  all 
documents  whatsoever  gathered  and  collected  by  the  Universal  Com- 
pany of  the  Panama  Interoceanic  Canal,  bearing  in  any  manner  on  the 
study,  construction,  or  improvement  and  operation  of  the  canal  and  its 
appurtenants,  as  well  as  the  privileges  attached  to  the  same,  and  all 
contracts  or  agreements  with  third  parties. 

Fourthly.  All  rights  of  any  nature  and  description,  part  ownership, 
or  any  other  rights  whatsoever  which  may  belong  or  accrue  to  the 
Interoceanic  Canal  Universal  Company  now  being  liquidated,  in  the 
Panama  Railroad  at  Colon,  now  worked  and  operated  by  an  American 
company  known  as  the  Panama  Railroad  Company,  whose  legal  resi 
dence  is  in  New  York.  The  said  rights  being  transferred,  such  as  they 
are  and  exist,  carrying  with  them  all  the  privileges  which  they  entail; 
and  M.  Gautron  binding  himself,  in  his  official  capacity,  to  invest 
with  them  the  present  company  in  the  form  and  in  compliance  with 
all  the  formalities  required  for  such  due  and  valid  transfer  by  the  laws 
of  the  United  States  of  America. 

Whereas,  moreover,  the  said  rights  are  to  be  transferred,  as  well 
as  the  said  property,  such  as  they  exist  and  with  all  that  tin  y  entail, 
and  whereas  these  cession  or  grant  and  contribution  have  been  made 
by  Gautron  in  his  official  capacity,  with  the  following  reservations 
and  under  the  following  conditions,  to  wit: 

First.  The  liquidation  shall  have  and  receive  a  share  in  the  net 
profits  and  gains  of  the  enterprise,  amounting  to  60  per  cent  of  the 
said  profits  and  gains,  such  as  the  same  shall  be  determined  and  com- 
puted under  articles  51  and  52  of  the  constitution  and  by-laws. 

Secondly.  Fifty  thousand  shares  of  entirely  paid-up  stock  shall  be 
given  to  the  Government  of  the  United  States  of  Colombia,  as  pre- 
scribed by  the  extension  act  of  December  26,  18(,m>. 

Thirdly.  The  rights  of  every  nature  and  description  belonging  to 
the  liquidation  in  the  Panama  Railroad,  and  ceded  by  M.  Gautron, 
as  set  forth  in  paragraph  4  above,  shall  become  the  property  of  the 
new  compan}T  from  the  date  of  the  meeting  provided  for  by  article  75 
of  the  constitution  and  by-laws.  No  pecuniary  compensation  i^  required 
of  the  new  company  for  the  cession  of  these  rights,  but  they  are  trans- 
ferred on  the  condition  and  with  the  full  understanding  that  said 
transfer  shall  be  void  if  the  canal  be  not  completed  within  the  time 
appointed  by  the  grant.    Should  the  work  not  be  completed  within 


230 


PANAMA  CANAL  TITLE. 


the  said  period  of  time,  the  said  rights  shall  revert  to  the  liquidation. 
It',  contrary  to  all  expectations,  the  meeting  in  question  should  fail  to 
take  the  necessary  measures  to  complete  the  canal,  or  if  the  measures 
thus  taken  by  the  said  meeting-  should  prove  impossible  of  execut  ion, 
the  present  company  would  still  retain  the  said  rights  accruing  from  the 
railroad  aforesaid;  but  it  would  be  bound  to  pay  to  the  liquidation  a 
sum  of  20,000,000  francs  as  indemnity,  while  the  liquidation's  share 
in  the  gains  and  profits  of  the  new  company  would  then  be  equal  to  one- 
half  of  the  said  gains  and  profits,  without  further  previous  reduction 
than  such  as  is  provided  for  by  paragraphs  2  and  3  of  article  51. 
Consequently  the  said  rights  shall  remain  inalienable  in  the  hands  of 
the  new  company  aforesaid  either  until  the  payment  of  the  said 
20,000,000  francs  or  until  the  full  completion  of  the  canal. 

Fourthly.  Until  the  full  completion  of  the  canal,  M.  Gautron  shall 
have  power,  in  his  official  capacity,  to  appoint  an  inspecting  or  super- 
vising committee  composed  of  three  members,  to  be  selected  as  far  as 
possible  from  among  civil  engineers  and  finance  inspectors,  in  order  to 
inspect  the  progress  of  the  work,  the  condition  and  maintenance  of  the 
plant  and  real  property,  as  well  as  the  accounts  kept  in  relation  to  these 
various  subjects.  The  compensation  of  this  committee  shall  be  at  the 
expense  of  the  new  company. 

Whereas,  according  to  the  terms  of  article  51  of  the  constitution  and 
by-laws  of  the  said  new  company  the  annual  proceeds  of  the  enterprise 
shall  be  used  to  pay  and  discharge: 

First.  The  share  in  the  gains  and  profits  stipulated  and  reserved  to 
itself  by  the  Government  of  the  United  States  of  Colombia,  according 
to  the  terms  of  the  grant. 

Secondly.  The  costs  of  maintenance  and  the  operating  expenses,  the 
expenditures  entailed  in  the  management  of  the  concern,  and,  generally 
speaking,  all  charges  incurred  by  the  company,  as  well  as  the  payment 
of  interest  and  the  redemption  of  all  loans  which  may  have  been  con- 
tracted. 

Thirdly.  The  deduction  of  one-twentieth  levied  on  the  net  profits 
after  the  settlement  and  cancellation  of  all  items  of  indebtedness  above 
enumerated,  the  said  deduction  to  be  applied  to  the  formation  of  the 
legal  reserve  fund. 

Fourthly.  Five  per  cent  of  the  capital  stock,  the  same  to  be  applied 
by  the  general  meeting  as  the  council  of  administration  may  advise, 
both  to  the  formation  of  the  redemption  fund  which  is  to  be  established 
under  article  55  and  to  the  pajmient  of  interest  on  unredeemed  shares. 

Whereas,  according  to  the  terms  of  article  52,  the  net  gains  and 
profits  of  the  enterprise  will  consist  in  whatever  will  be  left  of  the 
annual  proceeds  after  deduction  of  the  various  items  enumerated  in  the 
preceding  article  hereof,  while  5  per  cent  of  these  net  profits  will  be 
set  apart  for  the  benefit  of  the  council  of  administration,  and  the  surplus 
shall  go,  40  per  cent  to  the  shares  created  and  60  per  cent  to  the  Inter- 
oceanic  Canal  Universal  Company  now  in  process  of  liquidation; 

Whereas,  finally,  by  the  terms  of  article  75,  when  the  expenses 
incurred  for  the  work  done  on  the  canal  and  for  the  settlement  of  obli- 
gations resulting  from  the  contribution  made  Gautron  in  his  official 
capacity  as  liquidator  shall  have  reached  a  sum  equal  to  at  least  one-half 
of  the  capital  stock  (excluding  nonspecies  portions  of  the  same),  the 


PANAMA  CANAL  TITLE. 


231 


results  then  achieved  from  the  work  already  done  and  the  consequent 
decisions  to  be  taken  for  the  future  of  the  enterprise  shall  be  passed 
upon  by  a  special  technical  commission  brought  together  at  some 
previous  and  opportune  time,  the  said  commission  to  consist  of  two 
members  designated  by  the  council  of  administration  of  the  present 
company  and  of  two  persons  named  by  the  liquidation  of  the  former 
Universal  Company  for  an  Interoceanic  Canal,  together  with  a  fifth 
member  whom  the  other  four  shall  designate,  and  who  shall  be  presi- 
dent of  the  said  commission,  but  who,  in  case  the  other  four  members 
should  fail  to  agree,  shall  be  appointed  by  the  president  of  the  tri- 
bunal of  commerce  for  the  department  of  the  Seine; 

Whereas  the  council  of  administration  shall  be  bound  to  make  public 
the  report  made  by  this  commission,  and  to  summon  an  extraordinary 
or  special  general  meeting; 

Whereas  this  meeting  shall  have  to  deliberate  on  ways  and  means  to 
insure  the  completion  of  the  work  and  on  the  stipulations  hereinabove 
set  forth,  article  5,  paragraph  1,  number  3;  whereas  the  constitution 
and  by-laws  in  question  must  be  submitted,  by  the  terms  of  article  10 
above  mentioned  of  the  law  dated  July  1,  1893,  to  the  tribunal  for 
ratification,  touching  the  contributions  intended  to  be  made  to  the  New 
Panama  Canal  Company  by  Gautron  in  his  official  capacity,  and  whereas 
this  ratification  is  prayed  for  b/v^  Gautron; 

Whereas  the  said  contributions  are  within  the  competency  of  the 
liquidator,  according  to  decrees  which  appointed  him  with  the  broadest 
powers,  notably  with  that  of  ceding  or  contributing  to  a  new  company 
all  or  part  of  the  company's  assets;  whereas  the  conditions  stipulated 
for  the  benefit  of  the  Universal  Company  of  the  Panama  Interoceanic 
Canal  seem  to  be  in  accord  with  its  own  interests,  and  therefore  it  is 
proper  to  ratify  and  approve  the  agreement  declaring  these  contribu- 
tions and  conditions; 

For  these  reasons  the  court,  leaving  unimpaired  the  right  of  share- 
holders, of  the  attorney  or  mandataire  of  obligation  holders,  and  of 
other  creditors  of  the  company  to  intervene  and  make  objection  under 
article  11  of  the  law  dated  July  1,  1893, 

Does  hereby  approve  and  ratify,  purely  and  simpty,  the  constitu- 
tion and  by-laws  of  the  New  Panama  Canal  Company,  as  received  by 
Lefebvre  and  his  colleague,  notaries,  in  Paris,  on  the  26th  day  of  June, 
1891,  touching  the  contributions  made  by  Gautron  in  his  capacity  as 
liquidator  of  the  Universal  Companj7  of  the  Panama  Interoceanic  Canal, 
and  the  court  hereby  orders  that  the  present  decree  be  published  within 
the  space  of  ten  days  in  the  "Journal  Officiel"  and  in  the  "  Journal 
Officiel  (Commune  edition),'1  according  to  article  11  of  the  law  of  July 
1,  1893. 

Signed:  Baudouin,  de  Boislisle,  and  Lasnier.  Done  and  adjudged 
by  Messrs.  Baudouin,  president;  de  Boislisle,  vice-president;  Laporte, 
judge;  Tassart,  supernumerary  judge;  Le  Berquier,  supernumerary 
judge,  in  the  presence  of  Monsieur  Cabat,  assistant  attorney  for  the 
Commonwealth,  attended  by  Lasnier,  clerk,  June  29,  1894. 

The  order  was  signed  by  the  honorable  president  of  the  court,  by  the 
reporting  judge,  and  by  the  clerk. 

Recorded  in  Pans  July  11,  1891,  folio  50,  third  subdivision.  Re- 
ceived 9  francs  and  38  centimes,  decimes  included. 


232 


PANAMA  CANAL  TITLE. 


EXHIBIT  L. 

JUDGMENT  OF  AUGUST  8,  1894,  DECIDING  A.GAIN&T  TIERCE  OPPOSI- 
TIONS TO  JUDGMENTS  OF  JUNE  29,  WHICH  APPROVED  CONTRIBUTION 
BY  THE  LIQUIDATOR  TO  THE  NEW  COMPANY,  ETC. 

[Taken  from  the  minutes  of  the  clerk's  office  of  the  civil  tribunal  of  first  instance  of 
the  Department  of  the  Seine  sitting  at  the  Palace  of  Justice  at  Paris.  ] 

The  civil  tribunal  of  first  instance  of  the  Department  of  the  Seine, 
sitting  at  the  Palace  of  Justice  at  Paris,  has  rendered  in  public  session 
of  the  first  chamber  the  following  judgment: 

Session  of  Wednesday,  August  8,  1894. 

Between  M.  Gautron.  judicial  administrator,  residing  at  Paris,  rue 
Tronchet,  No.  13.  acting  as  administrator  liquidator  of  the  Universal 
Company  of  the  Interoceanic  Canal  of  Panama,  the  headquarters  of 
which  are  at  Paris,  rue  de  la  Victoire,  No.  03  bis. 

Appointed  to  the  said  function-  by  judgment  of  the  chamber  of  the 
council  of  the  civil  tribunal  of  the  Seine,  dated  July  21.  1 893,  recorded; 

Defendant  against  tierce  opposition,  defendant  against  intervention, 
appearing,  submitting  brief,  and  arguing  through  Maitre  Lourtaunau, 
advocate,  assisted  by  Maitre  de  Bieville,  solicitor. 

On  the  one  part. 

And: 

First,  M.  Georges  Emile  Lemarquis.  judicial  administrator  of  the 
civil  tribunal  of  the  Seine,  residing  at  Paris,  rue  Louis  le  Grand, 
No.  3; 

Acting  in  the  character  of  judicial  mandataire  of  the  bondholders  of 
the  Panama  Company; 

Appointed  to  the  said  functions  by  judgment  of  the  chamber  of  the 
council  of  the  civil  tribunal  of  the  Seine,  dated  July  4,  1893,  recorded; 

Plaintiff  in  tierce  opposition,  appearing,  briefing,  and  arguing  by 
Maitre  ,  advocate,  assisted  by  Maitre  Dubourg,  solicitor. 

Of  the  other  part. 

Second.  M.  Pierre  Couaillier,  janitor,  residing  at  Paris,  rue  de  Lille, 
No.  65,  i 

Plaintiff  in  tierce  opposition,  appearing,  concluding,  and  arguing  by 
Me.  X.,  advocate,  assisted  by  Maitre  Legrand,  solicitor. 

Third.  M.  Muracciole,  residing  at  Muracciole  (Corsica),  intervenor, 
appearing  briefly  and  arguing  by  Maitre  X..  advocate,  assisted  by 
Maitre  Dumesnil,  solicitor. 

Fourth.  M.  Duhamel,  residing  at  Paris,  rue  de  TAqueduc. 

Fifth.  M.  Leprince,  residing  at  Paris,  rue  Aubry  de  Boucher. 

Sixth.  M.  Pollike,  residing  at  Paris,  etc. 

[Here  follow  names  and  addresses  of  thirty-eight  persons,] 

Plaintiffs  by  intervention,  defendants  by  tierce  opposition,  appear- 
ing briefl}T,  and  arguing  by  Maitre  X.,  advocate,  assisted  by  Maitre 
Ernest  Jacob,  solicitor. 

Of  the  last  part. 

Without  their  present  characters  being  able  to  prejudice  in  any  way 
the  rights  and  interests  of  the  respective  parties. 


TANAMA  CANAL  TITLE. 


233 


POINTS  OF  FACT. 

Paragraph  1.  Tierce  opposition  of  M.  Lemarquis,  in  his  character 
aforesaid,  to  the  judgment  of  June  29,  185)3.  which  approves  the  con- 
tribution made  by  M.  Gautron,  in  his  character  aforesaid,  to  the  New 
Panama  Canal  Company. 

According  to  the  document  of  Fabre,  bailiff  at  Paris,  dated  July  7, 
1894,  M.  Lemarquis,  in  his  said  character,  has  caused  to  be  given  to 
M.  Gautron,  in  his  said  character,  notification  to  appear  before  the 
first  chamber  of  the  civil  tribunal  of  the  Seine  in  order  that: 

Whereas,  by  judgment  of  the  first  chamber  of  the  civil  tribunal  of 
the  Seine,  dated  June  29  last,  recorded,  the  tribunal  approved  the  con- 
tribution made  by  M.  Gautron,  in  his  said  character,  to  the  New 
Panama  Canal  Company,  an  anonymous  association  now  being  formed, 
but  reserving  expressly,  under  the  terms  of  article  11  of  the  law  of 
July  1,  the  right  for  M.  Lemarquis.  in  his  said  character,  to  proceed  ^ 
against  said  judgment  by  tierce  opposition; 

Whereas,  it  is  not,  at  least  up  to  the  present  time,  demonstrated  to 
the  appearer,  in  his  said  character,  that  the  bondholders  he  represents 
consider  the  agreement  aforesaid  advantageous  for  them; 

Whereas,  in  view  of  the  importance  of  the  interests  involved  by  that 
agreement,  it  is  not  possible  for  the  appearer,  in  his  said  character,  to 
take  a  definitive  part  without  being  previously,  by  all  the  means  in 
his  power,  informed  of  the  views  of  his  principals; 

That  it  is  important  to  him,  therefore,  to  reserve  provisionally  all 
their  rights,  and  especially  to  furnish  them,  by  instituting  tierce  oppo- 
sition, the  opportunity  to  intervene  in  the  discussions,  if  the}T  see  fit, 
under  the  terms  of  article  2,  paragraph  3,  of  the  law  of  July  1,  1893. 

For  these  reasons,  [he  asks]  to  be  admitted  in  his  said  character  as 
a  tiers  opposant  to  the  execution  of  the  judgment  aforesaid  of  June 
29  last;  on  the  merits  [he  asks]  to  have  a  determination  as  may  be 
proper  after  the  tribunal  shall  receive  information  as  to  the  merits  of 
the  tierce  opposition; 

[Asks]  to  have  M.  Gautron,  in  his  said  character,  condemned  in  all 
the  costs. 

[Gautron  answers,  claiming  that  the  purely  formal  tierce  opposition 
should  not  be  allowed,  as  it  is  very  urgent  for  him  to  arrive  at  the 
constitution  of  the  new  company  and  to  avoid  forfeiture  of  the  conces- 
sion.  He  asks  accordingly  to  have  Lemarquis  declared  inadmissible.] 

Paragraph  2.  Defense  by  the  tierce  opposition,  of  M.  Lemarquis, 
in  his  said  character,  to  the  judgment  of  June  29, 1894:,  which  approves 
the  contract  containing  the  eventual  cession  to  the  General  Company, 
the  Credit  Lyonnais,  and  to  the  Credit  Industriel  and  Commercial  of 
54.5  lotteiy  bonds  of  the  Universal  Panama  Canal  Company. 

According  to  document  of  Fabre,  bailiff  at  Paris,  dated  July  7,  1894, 
M.  Lemarquis,  in  his  said  character,  gave  notification  to  M.  Gautron, 
in  his  said  character,  to  appear  within  eight  full  days  before  the  first 
chamber  of  the  tribunal,  in  order  that; 

Whereas,  on  the  29th  of  June,  1894,  there  was  entered  a  judgment 
of  the  first  chamber  of  the  civil  tribunal  of  the  Seine,  which  pro- 
nounced approval  of  the  contract  containing  an  eventual  cession  by  M. 
Gautron,  as  liquidator  of  the  Panama  Company,  to  the  General  Com- 
pany, the  Credit  Lyonnais,  and  to  the  Credit  Industriel  and  Commer- 
cial, of  545  lottery  bonds  of  the  said  coinpan}\ 


234 


PANAMA  CANAL  TITLE. 


And  moreover,  for  the  reasons  already  stated  in  the  tierce  opposi- 
tion to  the  judgment  which  approves  the  contribution  of  M.  Gautron 
to  the  New  Panama  Company,  as  mentioned  above; 

In  due  form,  [asks]  to  have  M.  Lemarquis,  in  his  said  character, 
received  as  a  tiers  opposant  to  the  judgment  aforesaid  of  the  29th  of 
June,  1894; 

On  the  merits,  to  have  a  decision  as  may  be  right  on  the  merits  of 
the  tierce  opposition  after  information  shail  be  furnished  to  the  tribu- 
nal; 

To  have  M.  Gautron  condemned  in  the  costs  in  any  event. 

[To  this  Gautron  responded,  asking  (after  again  speaking  of  the 
urgency  of  arriving  at  the  constitution  of  the  new  company  before  the 
expiration  of  the  prorogued  concession)  for  the  rejection  of  Lemar- 
quis's  tierce  opposition,  and  a  decision  that  the  judgment  of  approval 
should  be  executed.] 

Paragraph  3.  Defense  by  tierce  opposition  of  M.  Couaillicr  to  the 
three  judgments  of  June  29,  1894. 

According  to  document  of  Gillet,  bail  ill'  at  Paris,  dated  July  26, 
1894,  M.  Couaillier  caused  notification  to  be  served  upon  M.  Gautrou, 
in  his  aforesaid  character; 

To  appear  on  Thursday,  the  2d  of  August,  1894,  before  the  first 
chamber  of  the  civil  tribunal  of  the  Seine  in  order  that; 

Whereas,  he  is  owner  of  three  bonds  of  500  francs,  5  per  cent  of  the 
Universal  Company  of  the  Interoceanic  Canal  of  Panama,  numbers 
41,746  to  41,748,  and  of  a  share  of  stock  of  the  said  companv,  number 
335,973; 

That  in  those  characters  he  has  the  right  to  enter  tierce  opposition  to 
the  judgments  rendered  by  the  first  chamber  the  29th  of  June,  which 
have  approved: 

First.  The  by-laws  of  the  New  Panama  Company  constituted  by 
M.  Gautron,  liquidator  of  the  old  company,  and  fry  other  persons. 

Second.  The  settlement  made  between  it  and  M.  Eiffel. 

Third.  The  agreement  entered  into  between  him  and  three  establish- 
ments of  credit. 

Paragraph  first.  As  to  the  document  constituting  the  compan}T: 
That  this  document  establishes  the  by-laws  of  a  new  company  called 
the  Universal  Company  of  the  Canal  of  Panama;  that  according  to  the 
terms  of  that  document  M.  Gautron  contributes  in  his  aforesaid  char- 
acter to  the  new  compamT,  especially  the  rights  of  all  kinds,  shares  of 
ownership  whatsoever  of  the  company  of  which  he  is  liquidator  as  to 
the  railroad  from  Panama  to  Colon,  operated  by  an  American  company 
called  the  Panama  Railroad  Company,  with  the  condition  of  forfeiture 
that  the  canal  shall  be  terminated  in  the  time  fixed  by  the  act  of  con- 
cession; 

That  moreover  the  by-laws  provide  that  if  a  meeting,  which  is  pro- 
vided for  by  article  75,  does  not  take  the  necessary  measures  for  the 
accomplishment  of  the  canal,  or  if  the  measures  so  taken  by  it  do  not 
succeed,  the  said  rights  as  to  the  railroad  shall  remain  acquired  by  the 
new  company,  on  paying  a  sum  of  20,000,000  by  way  of  indemnity, 
and  in  that  case  the  part  of  the  profits  to  go  to  the  liquidation  will  be 
the  one-half  of  the  profits  of  the  new  company; 

That  it  is  impossible  to  admit  that  the  Panama  Kailroad,  which  con- 
stitutes the  most  considerable  element  of  the  assets  of  the  liquidation, 
can  be  abandoned,  even  conditionally,  for  a  sum  of  20,000,000,  since 


PANAMA  CANAL  TITLE. 


235 


it  has  cost  more  than  93,000,000  to  the  company  in  liquidation,  and 
that  its  normal  traffic  has  reached,  from  L874  to  1880,  that  is  in  six- 
years,  for  the  70,000  shares  of  50  francs  each,  99  per  cent  dividend, in 
addition  to  an  annual  interest  of  5  per  cent  ; 

That  it  is  to  be  remarked  that  these  2<  >. 000,000  will  betaken  from  the 
resources  of  the  new  company,  which  have  been  furnished  them  in 
great  part  by  the  liquidation  of  the  old  company; 

That  such  an  abandonment  ought  to  result  from  the  single  fact  of  a 
recognition  at  some  time  that  the  canal  is  not  susceptible  of  construc- 
tion; 

That  the  new  company  will  ever  have  an  interest  in  sacrificing  the 
canal  to  continue  the  profitable  operation  of  the  railroad;  that  all 
the  projects  of  reconstitution  of  the  Panama  alt  air  have  had  up  to  the 
present  for  their  basis  the  ownership  of  the  Panama  Railroad  in  the 
patrimony  of  the  liquidation.  If  these  companies  do  not  arrive  at 
the  accomplishment  of  the  canal,  this  cession  of  the  railroad  will  be 
disadvantageous. 

Paragraph  2.  Eiffel  agreement:  That  b}T  another  judgment  of  the 
same  day,  of  the  first  chamber,  the  civil  tribunal  of  the  Seine  approved 
a  transaction  had  between  M.  Gautron,  in  his  character  aforesaid,  and 
M.  Eiffel,  b}r  the  terms  of  which  the  latter  agreed  to  subscribe  snares 
to  the  value  of  10,000,000  in  any  new  company  having  for  its  object 
the  reconstitution  of  the  work  of  Panama,  and  in  which  it  has  been 
further  agreed  that  for  the  bills  of  exchange,  of  which  he  is  the  holder, 
M.  Eiffel  shall  receive  in  pa}Tment  lottery  bonds  of  the  company  in 
liquidation,  entirely  paid  up,  calculated  at  125  francs; 

That  by  means  of  the  making  of  those  agreements  all  litigation 
pending  between  M.  Eiffel  and  the  Panama  Company  was  to  be  ended; 

That  this  transaction  is  contrary  to  the  interests  of  the  liquidation; 
that  not  only  the  credits  of  M.  Eiffel  are  illusory,  but  that  he  ought 
to  restore,  without  any  compensation,  considerable  sums; 

That  in  any  event  it  is  inadmissible  that  M.  Eiffel  can  free  himself  by 
a  transaction  from  restitutions  which  are  at  his  charge,  by  means  of  a 
subscription  to  shares,  which,  the  day  after  the  constitution  of  the 
company,  he  can  resell  to  the  public,  perhaps  even  at  a  premium; 

That  the  spirit  of  the  law  of  July  1,  1893,  indicates  that  the  resti- 
tutions to  be  made  by  the  debtors  of  the  company  ought  to  be  made 
in  money  deposited  at  the  Bureau  of  Deposits  and  Consignments  and 
distributed  among  the  company  creditors; 

That  consequent! v  the  transaction  had  with  M.  Eiffel  is  prejudicial 
to  the  interests  of  the  company  in  liquidation. 

Paragraph  3.  Agreements  with  the  three  credit  companies. 

That,  hy  a  third  judgment,  the  civil  tribunal  of  the  Seine  approved 
an  agreement  made  between  M.  Gautron,  in  his  character  aforesaid, 
and  the  three  credit  establishments,  the  Credit  Lyonnais,  the  general 
company  to  advance  the  development  of  industry  and  commerce,  and 
the  general  company  of  the  Credit  Industriel  and  Commercial; 

That,  by  the  terms  of  this  agreement,  M.  Gautron  sells  conditionally 
to  those  establishments  of  credit  lotteiy  bonds  of  the  company  in 
liquidation,  and  this  up  to  a  maximum  number  of  515,000  bonds,  at  90 
francs  each; 

That  it  is  inadmissible  that  the  liquidator  should  abandon  at  the 
price  of  90  francs  these  lottery  bonds,  which  are  quoted  on  the  Bourse 


230 


PANAMA    (  ANAL  TITLE. 


at  L25  francs,  and  which  he  himself  transfers  to  M.  Eiffel  at  the  price 

of  125  francs; 

That,  besides,  these  lottery  bonds  arc  susceptible  of  returning  to 
their  value  of  issue,  viz.  360  francs; 

That,  on  the  other  hand,  the  law  of  July  15,  1889,  which  authorized 
the  liquidator  to  negotiate  the  lottery  bonds  not  yet  placed,  without 
limitation  of  price  or  of  interest,  has  given  that  authorization  only 
upon  the  following  conditions: 

In  case  the  liquidator  shall  make  contribution  or  cession  of  all  or  part  of  the  liqui- 
dation [sic]  to  a  company  created  for  the  accomplishment  of  the  canal  (an  hypothesis 
which  is  realized),  the  new  company  will  not  be  able  to  issue  the  bonds  at  that  time 
not  placed  on  the  terms,  except  on  the  conditions  determined  by  the  law  of  1888,  as 
regards  the  minimum  of  the  price  of  issue  and  as  to  interest. 

That  by  the  terms  of  this  law  the  cost  at  issue  can  not  be  less  than 
360  francs,  comprising  the  (50  francs  reserved  for  the  payment  of 
prizes  and  sinking  and  the  annual  interest,  to  descend  [sic]  below  3 
per  cent  of  the  nominal  capital: 

That  thus  the  cession  at  a  low  price  of  those  bonds  made  by  the 
liquidation  is  contrary  to  law: 

That  moreover  the  appearer,  far  from  disapproving  the  project  of 
the  reconstitution  of  the  work  of  Panama,  is  quite  ready  to  give  his 
adhesion  as  concerns  that  to  any  combination  which  will  assure  respect 
for  the  law.  safeguard  the  patrimony  of  the  liquidation,  and  favor  the 
accomplishment  of  the  canal; 

That  this  end  can  be  attained  without  more  than  the  resources  of  the 
liquidation; 

For  these  reasons  [he  asks]  to  be  received  as  tiers  opposant  to  the 
three  judgments  aforesaid; 

To  have  the  three  judgments  in  question  declared  void  and  of  no 
effect; 

Consequently,  to  have  refused  the  approval  of  the  by-laws  of  the 
New  Panama  Canal  Company  made  before  Lefebvre  and  his  colleague, 
notaries  at  Paris.  June  26,  1894,  of  the  transaction  with  M.  Eiffel,  and 
of  the  agreement  entered  into  with  the  Credit  Lyonnais,  the  General 
Company,  and  the  Credit  Industriel  and  Commercial; 

To  have  the  costs  allowed: 

By  a  document  of  the  Palace,  dated  July  31,  1894,  recorded.  INI.  de 
Bieville.  advocate  of  M.  Gautron,  in  his  character  aforesaid,  served 
upon  Me.  Legrand,  solicitor  of  M.  Couaiilier,  his  conclusions  or  brief, 
asking  that  it  may  please  the  tribunal: 

That,  after  having  thus  given  his  adhesion  to  the  principle  of  recon- 
stitution of  the  Panama  Company,  the  tiers  opposant  may  abstain 
from  indicating  the  means  of  attaining  the  threefold  end  which  he 
proposes; 

That  he  may  limit  himself  to  criticising  the  combination  offered  by 
the  liquidator  for  the  acceptance  of  the  bondholders; 

As  for  what  concerns  the  contribution  to  the  New  Panama  Canal 
Company: 

Whereas  these  observations  of  M.  Couaiilier  have  not  escaped  the 
attention  of  the  liquidator  of  the  Panama  Company;  and  that  all  the 
efforts  as  well  of  the  predecessors  as  of  himself  have  been  given  to 
defending  the  patrimony  of  the  liquidation,  and  especially  its  rights 
in  the  Panama  Railroad;  that  the  tiers  opposant  himself  recognizes  in 


PANAMA  CANAL  TITLE. 


237 


leferring  to  them  that  the  preceding  projects  of  reconstitution  reserved 
to  the  liquidation  the  ownership  of  its  rights  in  the  Panama  Railroad, 
if  the  canal  should  not  be  finished; 

But,  whereas,  those  projects  have  not  resulted  in  anything; 

That  the  date  for  the  expiration  of  the  period  allowed  in  the  pro- 
it  Ration  of  the  concession  is  imminent; 

Whereas,  to  attract  large  capital  to  attempt  anew  the  piercing  of  the 
isthmus,  it  has  been  indispensable  to  give  it  confidence  in  the  enter- 
prise; 

Whereas,  while  doing  what  that  necessity  requires.  M.  Gautron,  in 
his  character  aforesaid,  has  reserved  to  the  liquidation  one-half  of  the 
profits  to  be  received  in  carrying  on  the  railroad; 

That,  under  the  circumstances,  it  is  for  the  bondholders  cither  to 
accept  the  combination  proposed,  or  to  renounce  all  hope  of  reviving 
the  matter,  and  to  proceed  purely  and  simply  to  realization  and  to  the 
distribution  of  the  assets  realized; 

Whereas  it  is  not  serious  to  pretend  that  the  accomplishment  of  the 
canal  can  be  attained  with  the  mere  resources  of  the  liquidation; 

As  to  what  concerns  the  Eiffel  transaction; 

Whereas  the  credits  of  M.  Eiffel,  on  account  of  the  works  which 
he  has  executed  during  the  liquidation,  can  not  be  denied; 

Whereas  in  his  estimates  M.  Couaillier  takes  no  account  either  of 
the  difficulties  of  litigation  or  of  the  chances  of  recovery; 

Whereas  the  Eiffel  transaction  has  alread}T  been  approved  by  judg- 
ment of  May  11,  1891,  notwithstanding  the  intervention  of  the  bond- 
holder, M.  Pichot,  an  intervention  soon  abandoned  by  him; 

Considering,  finally,  that  article  313  provides:  "The  shares  shall 
be  in  the  names  of  the  holders  [not  to  bearer]  until  they  are  entirely 
paid  up,  in  conformity  with  the  law  of  August  1,  1893." 

Besides,  no  share  can  be  negotiated  and  the  council  of  administra- 
tion can  not  authorize  the  transfer  until  it  is  fully  paid  up; 

That  it  is  necessary,  then,  for  M.  Eiffel  to  risk  a  capital  of  10,000,000 
to  pa}T  up  his  shares  before  he  can  negotiate  them; 

Whereas  there  is  nothing  in  the  law  of  July  1,  1893,  that  forbids 
the  liquidator  or  the  mandataire  of  the  bondholders  to  enter  into  trans- 
actions, provided  they  comply-  with  the  provisions  of  that  law. 

As  for  what  concerns  the  sale  of  lottery  bonds: 

Whereas  the  first  complaint  of  the  tiers  opposant  falls  before  this 
observation;  that  the  price  of  90  francs  has  been  fixed  on  account  of 
the  number  of  the  lottery  bonds  to  be  sold; 

That  this  sale  is  purely  within  the  rights  of  M.  Gautron  in  his  said 
character,  and  that  the  liquidator  is  interested  in  offering  the  bonds 
at  the  same  price  and  under  the  same  conditions,  and  in  preference  to 
shareholders  and  bondholders  of  the  Panama  company  in  liquidation. 

Whereas  it  is  not  correct  to  say  that  this  sale  is  contrary  to  the 
special  laws  regulating  the  Panama  company; 

Whereas  the  law  of  Jul\T  15,  1889,  authorized  the  liquidator  to 
negotiate,  without  limitation  of  price  and  without  interest,  the  lottery 
bonds,  the  issue  of  which  was  authorized  by  the  law  of  June  8,  1888, 
and  which  were  not  yet  issued  on  the  1th  of  February,  1889; 

That  it  is  only  in  case  the  liquidator  should  make  contribution  or 
cession  of  the  whole  or  part  of  the  assets  of  the  liquidation  that  the 
new  company  would  not  be  able  to  issue  the  bonds  at  that  time  not 


238 


PANAMA  CANAL  TITLE. 


issued  otherwise  than  under  the  conditions  determined  by  the  la  of 
June  (S,  1888,  so  far  as  concerns  the  minimum  price  and  the  interest: 

Whereas  this  last  event  has  not  taken  place;  that  it  is  the  liquidator 
who  realizes  on  the  lottery  bonds  and  not  the  new  company,  which  is 
not  yet  definitively  constituted; 

That,  consequently,  this  realization  is  free  from  the  conditions  of 
limitation  of  price  and  of  the  fixing  of  interest,  under  (he  terms  of  the 
first  paragraph  of  the  first  article  of  the  law  of  July  L6,  1889; 

For  these  reasons  [he  asks]  to  have  M.  Couaillier  declared  inadmis- 
sible, and  in  any  event  unfounded  in  his  tierce  opposition  to  the  three 
judgments  of  approval  rendered  by  this  chamber  on  June  29,  1894, 
recorded; 

In  doing  that,  to  declare  that  the  said  judgments  shall  have  their 
full  and  entire  effect,  and  to  condemn  M.  Couaillier  in  all  the  costs3 
allowance  being  made  for  the  fees  of  Me.  de  Bieville,  solicitor. 

Paragraph  1.  Defense  by  intervention  of  M.  Muracciole.  Accord- 
ing to  document  of  the  Palace,  dated  February  28,  L894,  Me.  Dumesnil, 
solicitor,  constituted  on  behalf  of  M.  Muracciole,  submitted  conclusions 
showing  his  constitution  as  solicitor  and  asking  that  it  might  please 
the  tribunal; 

Whereas  the  assets  of  the  Panama  Company,  which  the  execution 
of  these  agreements  exposes  to  new  risks,  constitutes  the  gage  of  the 
creditors  of  the  old  compan}\  and  it  can  not  belong  to  the  liquidator, 
who  represents  the  shareholders  but  not  the  creditors,  to  dispose  of  that 
gage  so  long  as  he  has  not  paid  the  creditors  interested  in  it: 

Whereas  the  appearer  is  a  creditor  of  the  Universal  Company  of  the 
Panama  Canal  by  virtue  of  judgments  dated  April  11, 1893,  which  have 
passed  into  the  condition  of  res  judicata; 

That  he  is  master  of  his  rights,  and  that  he  intends  to  exercise  them 
upon  the  assets,  such  as  the}T  are  to-day,  without  submitting  to  the  risks 
of  newT  combinations; 

That,  if  it  suits  the  interests  of  the  shareholders,  who  have  nothing  to 
claim,  that,  after  the  extinction  of  the  rights  of  the  creditors,  some  bond- 
holders may  constitute  themselves  as  a  company  to  expose  the  gage  of  the 
creditors  in  a  new  adventure,  in  which  they  have  everything  to  gain 
and  nothing  to  lose,  the  interest  of  the  creditors  is  altogether  different, 
and  that  it  can  not  belong  to  the  shareholders  to  put  a  check  to  their 
right,  respect  for  which  is  obligatory  upon  all,  and  more  especially 
when  the  creditor  has  an  ordinary  credit  verified  by  judgment,  the 
beneficiary  of  which  in  the  last  analysis  has  placed  confidence  in  the 
company  capital  and  in  the  associates; 

Whereas  the  right  of  tierce  opposition,  reserved  by  article  11  of 
the  law  of  July  1,  1893,  is  moreover  reserved  by  the  judgments  them- 
selves, so  that  the  present  pleading  is  as  admissible  in  law  as  it  is  just 
in  its  foundation; 

That  M.  Couaillier,  having  introduced  a  principal  demand  of  tierce 
opposition  to  these  three  judgments,  the  appearer  intends  to  intervene 
in  the  said  proceeding; 

For  these  reasons  [he  asks]  that  the  appearer  may  be  received  as  an 
intervenor  in  the  pending  proceeding  of  tierce  opposition  between  the 
parties; 

In  doing  this  to  have  himself  declared  a  tierce  opposant  to  the  three 
judgments  of  June  29,  1894; 

To  have  it  declared  that  those  judgments  are  without  effect  and  void; 
To  have  prohibited  the  execution  of  the  agreements  approved  by 


PANAMA  CANAL  TITLE. 


239 


the  said  judgments,  and  this  on  pain  of  being  personally  responsible 
for  the  credit  of  M.  Muracciole,  both  principal  and  interest; 

To  have  it  ordered  that  the  assets  realized  and  to  be  realized  shall 
remain  unchanged,  subject  to  the  credit  of  the  appearer,  and  that  they 
may  not  be  exposed  to  the  risks  of  any  enterprises; 

And  to  have  the  costs  adjudged,  with  allowance  of  fees  of  Me. 
Dumesnil,  solicitor; 

By  document  of  the  Palace,  dated  July  31,  1804.  Me.  de  Bieville, 
solicitor  of  M.  Gautron,  in  his  character  aforesaid,  served  upon  the 
solicitors  in  the  case  conclusions  asking  that  it  might  please  the  tribunal 
that  the  law  has  organized  a  special  regulation  of  the  liquidation  of 
the  Panama  Company; 

That  following  the  spirit  of  judicial  liquidation  and  bankruptcy  in 
commercial  matters,  it  has  subordinated  the  exercise  of  individual 
rights  to  the  general  interests; 

That,  consequently,  it  has  suspended,  from  the  promulgation  of  the 
said  law,  all  suits  in  course,  begun  either  by  holders  of  bonds  or 
by  any  creditors,  as  well  as  all  proceedings  for  taking  possession  of 
property  or  execution,  even  those  actually  in  course,  against  the  prop- 
erties, movable  or  immovable,  belonging  to  the  said  company; 

That  whereas  article  10  provides  expressly  for  the  cession  or  contri- 
bution of  the  whole  or  the  part  of  the  company  assets  by  the  liquidation 
of  the  Universal  Company  of  the  Interoceanic  Canal  of  Panama; 

That  the  said  article  only  requires  the  liquidator  to  submit  all  acts 
of  realization  of  the  assets  and  all  contracts  carrying  cession  or  con- 
tribution to  the  civil  tribunal  of  the  Seine,  which  is  to  decide  in  public 
session  upon  the  report  of  a  judge; 

That,  finally,  every  judgment  of  approval  is  to  be  published,  and  can 
be  attacked  by  tierce  opposition; 

Whereas  it  results  from  these  provisions  that  if  M.  Muracciole  has 
the  right  to  come  and  produce  before  the  tribunal  the  reasons  which 
make  him  consider  as  disadvantageous  the  combination  for  the  recon- 
stitution  of  the  Panama  Canal  Company,  he  can  not  oppose  the  transac- 
tions approved  with  an  objection  of  principle  drawn  from  the  ordinaiy 
law; 

For  these  reasons  [he  asks]  to  have  it  declared  that  the  intervention 
of  M.  Muracciole  is  inadmissible  in  law,  and  to  declare  him  unfounded 
on  the  merits  in  his  tierce  opposition  to  the  three  judgments  of  approval 
rendered  by  this  chamber  on  June  29,  1894,  recorded; 

In  doing  this,  to  declare  that  the  said  judgments  shall  have  their  full 
and  entire  effect; 

And  to  condemn  M.  Muracciole  in  the  costs,  with  the  allowance  of 
the  fee  of  M.  de  Bieville. 

Paragraph  5.  Defense  by  intervention  of  M.  Duhamel  and  consorts. 

According  to  the  document  of  the  Palace  dated  August  1, 1894,  Me. 
Ernest  Jacob,  solicitor  of  M.  Duhamel  and  consorts,  served  upon  Me. 
de  Bieville,  solicitor  of  M.  Gautron,  in  his  character  aforesaid,  con- 
clusions in  which  he  constitutes  himself  for  M.  Duhamel  and  consorts, 
and  asking  that  it  nnry  please  the  tribunal: 

Whereas  the  appearers,  holders  of  4,000  bonds  of  the  Panama  Com- 
paivy,  have  the  right  to  intervene  in  the  case  in  order  to  resist  the 
demand  of  the  said  M.  Couaillier; 

Whereas  the  different  agreements  made  by  the  liquidator  are  in 
conformity  with  the  interests  of  the  Panama  bondholders; 


240 


PANAMA  CANAL  TITLE. 


That,  on  the  other  hand,  the  demand  of  Couaillier  would  result  in  a 
liquidation  disastrous  and  injurious  to  the  bondholders; 

That,  under  these  circumstances,  the  appearers  unite  with  Gautron, 
in  his  said  character,  to  ask  the  rejection  of  the  tierce  opposition  insti- 
tuted by  M.  Couaillier; 

For  these  reasons  [they  ask]  that  they  may  be  received  as  inter- 
veners in  the  cause  pending  between  MM.  Couaillier  and  Gautron; 

On  the  merits,  to  have  it  declared  that  the  tierce  opposition  should 
be  rejected; 

Declared,  consequently,  that  M.  Couaillier  is  inadmissible,  or,  at  all 
events,  unfounded  in  his  demands  to  dismiss  them,  and  to  have  him 
condemned  in  the  costs,  including  those  of  the  intervention,  with 
allowances  of  the  fee  of  M.  Ernest  Jacob,  solicitor. 

By  document  of  the  Palace,  dated  August  1,  1894,  Me.  Ernest  Jacob 
gave  notice  to  Me.  de  BieVillefor  the  session  of  August  2, 1894.  By  a 
last  document  of  the  Palace  of  August  2,  1894,  Me.  de  Bieville,  solici- 
tor of  M.  Gautron,  in  his  said  character,  submitted  conclusions  asking 
that  it  might  please  the  tribunal: 

To  sustain  M.  Gautron,  in  his  said  character,  in  declaring  proper  the 
intervention  of  M.  Duhamel  and  consorts,  and  to  condemn  M.  Couail- 
lier in  the  costs,  with  allowance  of  fees  to  M.  de  Bieville. 

Paragraph  6.  Joining  of  the  proceedings.  In  this  condition  of  the 
case,  the  different  demands  in  tierce  opposition  and  interventions  have 
been  joined  and  put  in  order  for  the  session  of  this  day,  at  which  the 
advocates  of  the  parties,  assisted  by  their  solicitors,  have  presented 
themselves  at  the  bar,  and  explained  orally  the  conclusions  previously 
submitted  by  them,  and  have  asked  judgment  for  their  respective 
clients. 

The  public  minister  has  been  heard  in  his  conclusions  and  observations. 
In  this  condition,  the  affair  presents  for  judgment  the  following 
questions: 

POINTS  OF  LAW. 

Should  the  tribunal,  as  a  matter  of  law,  receive  M.  Lemarquis  in  his 
said  character  as  tiers  opposant  to  the  judgment  of  June  29,  1894? 

[The  other  questions  are  then  formally  stated,  and  the  tribunal 
names  over  the  advocates  who  argued  the  matter,  and  proceeds:] 

The  causes  being  joined  on  account  of  their  relations  with  each  other 
and  determining  upon  the  whole  by  one  and  the  same  judgment,  in  an 
ordinary  matter  and  in  first  resort; 

Considering  that  by  the  terms  of  article  5  of  the  by-laws  of  the  com- 
pany formed  for  the  accomplishment  of  the  Panama  Canal,  according 
to  a  document  made  July  26, 1894,  before  Lefebvre  and  his  colleague, 
notaries  at  Paris,  Gautron  in  his  character  of  liquidator  of  the  Uni- 
versal Company  of  the  Interoceanic  Canal  of  Panama,  declares  that  he 
contributes  to  the  new  company  on  the  conditions  indicated  in  the  said 
by-laws,  to  wit: 

First  [quoting  article  5].  That  with  a  view  to  obtaining  the  concur- 
rence necessary  in  the  subscription  of  the  capital  of  the  company  for 
the  accomplishment  of  the  canal,  and  to  assure  the  acquisition  of  the 
necessary  funds  which  will  have  to  be  paid  out  in  that  case,  Gautron 
has  requested  the  financial  aid  of  the  General  Company,  the  Credit 
Lyonnais,  and  the  Credit  Company  Industriel  and  Commercial; 

That  by  nonnotarial  documents,  dated  June  26,  1894,  recorded,  these 
three  establishments  promised  to  buy  from  him  in  the  case  provided 


TAX  A  MA   CANAL  TITLE. 


241 


for,  and  each  one  in  a  proportion  agreed  upon,  for  the  price  of  90  francs 
per  bond,  lottery  bonds  of  the  Interoceanic  ('anal  Company  entirely 
paid  up  or  freed  with  regard  to  the  civil  company,  and  these  to  the 
extent  of  a  maximum  quantity  of  545,000  bonds; 

That,  finally,  by  the  terms  of  the  transaction,  had  the  26th  of  Janu- 
ary. 1894,  between  the  liquidator  of  the  Panama  (anal  Company  and 
the  mandataire  of  the  bondholders  and  Gustave  Eiffel,  by  which  the 
latter  agreed  to  subscribe  shares  up  to  the  amount  of  ln.noo.non  in 
any  new  company  having  for  its  object  the  reconstitution  of  the  work 
of  Panama,  it  was  agreed  that  in  case  that  subscription  should  be  real- 
ized Eiffel  should  receive  in  payment  of  the  bills  of  exchange  he  held 
on  account  of  the  work  which  he  had  done  for  the  benelit  of  the  liqui- 
dation, a  corresponding  quantity  of  lottery  bonds  entirely  paid  up  and 
freed,  and  calculated  at  125  francs  per  bond; 

That  for  the  case  on  the  contrary  in  which  a  new  company  shall  not 
be  constituted.  Eiffel  engages  himself  to  pay  to  the  liquidator  the  net 
sum  of  5,000,000  francs  and  abandon  the  bills,  the  liquidation  on  its 
side,  abandoning  5.755  tons  of  iron,  etc.,  deposited  in  his  warehouses; 

Considering  that,  according  to  the  judgment  of  this  chamber  dated 
June  29,  1894,  recorded,  the  tribunal  has.  on  the  demand  of  Gautron 
as  liquidator,  approved  the  acts  above  analyzed  so  far  as  they  carry: 

The  first,  a  contribution  made  by  the  liquidator  to  the  company  of 
construction  and  the  two  others  realizations  of  the  assets; 

That  these  judgments  have  been  published  in  the  Official  Journal 
and  in  the  Official  Journal  (edition  of  the  Commune)  of  the  1st  of 
July.  1894; 

That  tierce  opposition  has  been  introduced  by  Lemarquis.  manda- 
taire of  the  bondholders,  and  Couaillier.  stockholder  of  the  Universal 
Company,  and  bondholder  of  that  company. 

That  Muracciole,  creditor  of  the  liquidation,  has  intervened  in  the 
tierce  opposition  of  Couaillier  in  which  he  has  joined; 

That  Duhamel  and  others,  as  bondholders,  have  intervened  in  the 
said  tierce  oppositions,  and  concluded  in  favor  of  their  rejection; 

Considering  that  the  said  tierce  opposition  and  intervention  are 
admissible  under  the  terms  of  Article  11  of  the  law  of  July  1,  1S93; 

On  the  merits: 

As  for  the  tierce  opposition  of  Lemarquis  as  mandataire: 

Considering  that  it  has  no  object  except  to  reserve  the  rights  of  the 
bondholders  and  enable  them  to  intervene  if  they  see  tit: 

That  except  Couaillier,  holder  of  three  bonds  only,  none  of  them 
have  made  use  of  that  opportunity: 

That  it  results  from  the  documents  submitted  by  Lemarquis.  and 
especially  from  the  correspondence  of  the  bondholders,  that  they  are 
by  a  very  large  majority  favorable  to  the  proposed  combination; 

That  a  very  small  number  of  these  bondholders  have  pronounced  in 
favor  of  the  distribution  of  the  assets,  which  distribution  could  give 
to  each  of  those  interested  but  a  very  small  dividend  and  would  neces- 
sarily carry  with  it  the  forfeiture  of  the  concession,  the  definitive 
abandonment  of  the  enterprise,  and  the  loss  without  compensation  of 
the  works  already  made,  of  the  immovable  property,  and  of  the  greater 
part  of  the  materiel; 

That,  under  these  circumstances,  M.  Lemarquis  has  justly  believed 
himself  authorized  to  join  in  the  demand  for  approval  made  by  Gau- 
tron. which  he  has  done  at  the  session. 


8751—02  16 


242 


PANAMA  CANAL  TITLE. 


As  for  the  tierce  opposition  of  Couaillier: 

Considering  that,  far  f rom  claiming  distribution  of  the  assets  and 
opposing  the  continuation  of  the  canal  enterprise,  Couaillier  declare 
himself  ready  to  give  his  own  adhesion  to  any  combination  for  itsj 
accomplishment; 

That  he  contends  only  that  this  end  will  be  attained  with  no  more 
than  the  resources  of  the  liquidation,  without  its  being  necessary  to  get 
rid  of  part  of  the  assets  for  the  benefit  of  the  new  company,  a  getting 
I  rid  the  legality  of  which  and  the  advantages  of  which  he  disputes, 
especially  as  regards  the  rights  of  the  liquidation  in  the  railroad  from 
Panama  to  Colon,  and  whereof  he  criticises  the  stipulations; 

Considering  that  none  of  the  combinations  attempted  since  1889 
under  divers  forms  for  the  reconstitution  of  the  work  of  Panama  has 
resulted  in  anything; 

That  it  would  be  idle  to  inquire  whether  one  or  another  of  them  would 
have  been  more  advantageous  if  it  had  been  possible  to  realize  them; 

That  by  the  very  force  of  things,  and  in  view  of  the  imminence  of 
the  date  fixed  for  the  forfeiture  of  the  concession,  the  approval  of  the 
contract  submitted  to  the  tribunal  can  alone  prevent  that  forfeiture; 

That  if  the  liquidator  recommences  the  work  at  the  risk  and  peril 
of  the  liquidation,  as  the  tiers  opposant  seems  to  think  proper,  he 
will  manifestly  exceed  the  powers  conferred  by  the  judgments 
appointing  him  and  by  the  law  of  July  1,  1893; 

That  he  would  fatally  absorb  all  the  resources  of  the  liquidation,  and 
expose  himself  to  a  certain  check,  since  the  canal  can  not  be  construct^ 
without  a  new  appeal  for  funds  which  a  dissolved  company  can  not 
make  with  any  chance  of  success: 

That,  on  the  contrary,  the  acts  of  contribution  and  of  realization  oj 
assets,  the  approval  or  which  is  asked,  are  within  the  powers  of  the 
liquidator;  that  their  legality  can  not  be  seriously  disputed;  that 
their  opportuneness  is  not  less  evident; 

That  the  preceding  attempts  have  all  failed  by  reason  of  obstacle' 
which  their  authors  have  met  with  when  they  attempted  to  get  th€ 
capital  necessary  to  recommence  the  work; 

That  it  would  be  chimerical,  before  recommencing  that  work,  anc 
without  waiting  for  the  practical  demonstration  by  serious  experiment* 
of  the  possibilities  of  accomplishing  the  work,  to  count  upon  outside 
aid  which  would  continue  to  keep  away  or  oppose  to  the  liquidator 
unacceptable  requirements;  but  it  is  legitimate  to  hope  that  such  ar 
experiment  will  revive  confidence,  and  will  dispose  the  national  saving? 
to  new  sacrifices; 

That  the  liquidator  should  not  be  complained  of,  then,  for  having 
consecrated  to  the  work  undertaken  by  the  new  compan}T  a  part  of  th( 
resources  of  the  liquidation,  and  still  less  for  having  interested  in  it? 
success  financial  establishments  whose  concurrence  will  be  necessan 
for  new  appeals  to  capital; 

Considering  as  to  what  concerns  especially  the  contribution  of  th* 
rights  as  to  the  railroad  from  Panama  to  Colon,  that  it  is  the  essentia 
basis  and  condition  of  the  new  combination,  not  only  on  account  of  th( 
necessary  correlation  of  the  two  enterprises,  but  because  it  permit? 
the  assurance  of  a  legitimate  remuneration  to  the  capital  of  the  ne^ 
company  in  case  the  accomplishment  of  the  canal  shall  be  finalh 
abandoned; 

That  it  is  proper  to  remark  that  the  cession  of  these  rights  is  no 
(but)  conditional; 


PANAMA  (ANAL  (TITLE. 


243 


That  they  will  return  to  the  liquidation  if,  the  accomplishment  of  the 
canal  having  been  decided  upon  by  the  general  meeting,  il  can  noi  be 
terminated  within  the  time  fixed  by  the  act  of  concession; 

That  this  rescissionary  clause  guarantees  completely  in  that  event 
the  interests  of  the  liquidation,  and  that  no  criticism  can  be  or  is 
indeed  directed  against  the  by-laws  under  that  heading; 

That  it  is  the  same  as  to  what  concerns  (he  giving'  to  the  new  com- 
pany of  the  said  rights  in  the  event  of  the  accomplishment  of  the 
canal; 

That  the  revenues  of  the  railroad  will  be  added,  in  that  event,  to  the 
profits  of  the  canal  and  benefit,  consequently,  the  liquidation,  which  is 
to  get  three-fifths  of  the  benefits  of  the  enterprise; 

That  if  these  rights  are  to  remain  the  property  of  the  new  company 
in  case  the  general  meeting  does  not  take  the  necessary  steps  for  the 
accomplishment  of  the  canal,  the  liquidation  will  not  receive,  in  that 
event,  as  the  tiers  opposant  seems  to  believe,  merely  an  indemnity  of 
twenty  millions  of  francs,  but  the  half  part  of  the  profits; 

That  the  only  deductions  authorized  in  that  case,  being  the  expenses 
of  maintenance  and  operation  and  of  administration,  and  the  taking 
out  of  a  twentieth  for  the  reserve  fund,  the  part  of  the  new  company 
in  the  revenues  of  the  railroad  will  not  exceed  that  paid  to  the 
liquidation; 

That  it  is  the  less  to  be  feared  that  the  company  will  renounce  for 
such  a  small  remuneration  the  accomplishment  of  the  canal,  with  the 
object  of  confining  itself  to  the  operation  of  the  Panama  Railroad 
because  the  works  and  the  annuities  paid  to  the  Colombian  Government 
will  have  at  that  time  absorbed  the  whole  or  the  major  part  of  its 
capital  in  such  a  way  that  the  company  will  find  that  it  has  bought 
for  nearly  80,000,000  the  half  of  the  revenue  of  the  railroad; 

That  the  apprehensions  manifested  by  Couaillier  are,  therefore, 
without  foundation; 

That  the  rights  as  to  the  railroad  were,  it  is  true,  bought  by  the 
Panama  Company  at  93,000,000,  but  it  is  shown  that  the  price  was  con- 
siderably increased  by  the  regulation  and  also  that  the  revenues  of  the 
railroad  were  artificially  raised; 

That  if  it  is  legitimate  to  count  in  the  future  upon  a  remunerative 
revenue,  it  is  not  less  demonstrated  that  the  sale  en  bloc  for  20,000,000 
francs  of  the  half  of  that  revenue  constitutes  an  operation  altogether 
to  the  advantage  of  the  liquidation; 

That  it  is  proper  to  recall,  on  the  other  hand,  that  the  liquidator, 
besides  the  influence  and  the  part  of  the  profits  which  will,  in  the 
contingency  arising,  belong  to  him  in  his  character  of  subscriber,  is 
assured  by  a  set  of  provisions  of  the  most  precise  kind  of  the  means 
of  effectively  examining  all  the  operations  of  the  new  company; 

That  without  speaking  of  the  commission  of  inspection,  provided  by 
article  5,  paragraph  4,  he  has  reserved  the  naming  of  the  half  of  the 
members  of  the  technical  commission; 

That,  finally,  the  prohibition  to  sell  shares  before  they  are  com- 
pletely paid  up  and  the  limitation  of  the  number  of  votes  allowed  to 
each  shareholder  in  the  general  meeting  appears  to  sufficiently  protect 
those  meetings  against  all  speculation; 

That  the  mandataire  of  the  bondholders  has  thought,  nevertheless, 
that  it  is  proper  to  fortify  further  the  guarantees  offered  by  the 
by-laws  to  the  liquidation,  and  has  obtained  from  the  principal  sub- 
scribers, notably  the  Eiffel  credit  companies,  an  agreement  not  to  cede 


244 


PANAMA  CANAL  TITLE. 


or  negotiate  their  shares,  until  the  commission  provided  for  by  article 
75  of  the  by-laws  shall  have  made  its  report,  and  the  general  meeting 
shall  have  pronounced  upon  the  continuation  or  stopping  of  the  work! 

That  it  is  proper  to  sanction  this  act  of  Lemarquis; 

As  for  what  concerns  the  promised  purchase  of  lottery  bonds  by  the 
credit  companies; 

Considering  that  if  the  price  of  90  francs  is  lower  than  the  present 
quotation,  it  is  sufficient  to  refute  the  objection  w  hich  the  tierce  oppo- 
sition undertakes  to  draw  from  that  circumstance  to  remark  that  the 
course  of  the  Bourse,  subject  to  the  fluctuations  of  speculation,  can  not 
serve  as  a  basis  for  the  sale  en  bloc  of  a  considerable  lot  of  values  not 
37et  issued; 

That  the  price  imposed  on  Eiffel  in  the  document  of  January  26, 1894, 
can  no  more  be  taken  as  a  means  of  comparison,  the  difference 
between  the  price  of  125  francs  stipulated  in  that  document  and  the 
quotation  at  that  time,  constituting  exactly  one  of  the  advantages 
conceded  to  the  liquidation; 

That,  on  the  other  hand,  it  is  not  necessary  to  dwell  upon  the  objec- 
tion of  principle  drawn  from  the  law  of  July  15,  1889,  the  restriction 
invoked  not  applying  to  the  liquidator,  who  is  expressly  authorized, 
on  the  contrary,  to  issue  the  bonds  without  limitation  of  price  and 
without  interest; 

That  it  is  proper  to  observe  finally  that  the  liquidator  remains  free 
not  to  profit  by  the  unilateral  engagement  contracted  by  the  credit  com- 
panies, if  the  capital  of  the  new  company  can  be  constituted  without 
their  aid;  and,  on  the  other  hand,  that  the  interests  of  the  bondholders 
are  safeguarded  by  the  light  of  preference  which  is  reserved  to  them; 

That  the  annexed  agreement  of  June  26,  1894,  is  then  altogether  to 
their  advantage; 

As  to  the  transaction  with  Eiffel; 

Considering  that  it  has  been  approved  upon  the  advice  of  three 
jurisconsults  designated  by  the  attorney  of  the  Republic; 

That  after  a  profound  examination  of  the  claim  upon  which  it  has 
been  entered  into,  they  have  considered  that  that  transaction  was 
advantageous  to  the  liquidation: 

That  this  opinion  has  been  shared  b}^  the  chamber  of  the  council, 
whose  decision  on  that  point  is  not  susceptible  of  any  attack; 

That  articles  10  and  11  of  the  law  of  July  1,  1893,  do  not  authorize 
tierce  oppositions  except  as  to  the  stipulations  canwing  the  realiza- 
tion of  assets,  to  wit,  the  giving  in  payment  of  lottery  bonds  and  the 
abandonment  of  the  materiel; 

That  these  stipulations  have  not  been  criticised  by  the  tiers  opposants; 

That  the  latter  is  manifestly  confused  when  he  characterizes  as 
illusory  a  debt  contracted  not  by  the  Panama  Company  but  by  the 
liquidation,  on  the  faith  and  for  the  profit  of  which  Eiffel  continued 
the  works  after  the  dissolution  of  the  company; 

That  if  the  law  of  July  1,  1893,  has  prescribed  the  deposit  at  the 
caisse  des  consignations  of  the  amount  of  the  transactions,  it  has  not 
forbidden  the  liquidator  to  receive  other  things  than  payments  in 
money,  and  especially  to  stipulate  for  his  benefit  the  right  to  be  released 
from  his  debts  in  consideration  for  the  turning  over  of  values; 

That  in  fact  the  method  of  settlement  adopted  is,  as  has  been  said 
above,  advantageous  for  the  liquidation; 

That  there  is  no  occasion,  therefore,  even  on  this  point  to  revise  the 
approval  pronounced  by  the  judgment  of  June  29; 


PANAMA  CANAL  TITLE.  245 

As  for  what  concerns  the  intervention  of  Muracciole: 

Considering  that  the  intervenor,  creditor  of  the  lTniversal  Panama 
Company,  by  virtue  of  a  judgment  of  April  LI,  L893,  claims  that  the 
assets  as  they  are  shall  be  and  should  remain  the  gage  of  the  creditors 
without  its  being  permitted  to  the  liquidator  representing  Only  the 
shareholders  to  dispose  of  them  and  least  of  all  to  subject  them  to  the 
chances  of  any  new  enterprise; 

That  he  opposes  himself  on  this  ground  to  the  execution  of  the  con- 
tracts made  by  Gautron; 

Considering  that  this  pretension  is  contrary  as  well  to  the  text  as  to 
the  spirit  of  the  law  of  July  1.  L893; 

That  this  law  has  authorized,  in  principle,  the  liquidator  to  make, 
under  the  conditions  w  hich  it  has  determined,  all  contributions  and 
realizations  of  assets;  that  it  intended  that  the  creditors  could  not 
oppose  these  acts  after  they  shall  have  been  approved,  as  in  conformity 
with  the  general  interest; 

That  it  is  precisely  to  prevent  them  that  it  has  suspended  their  suits 
and  execution  proceedings;  that  there  is  no  occasion  then,  to  dwell 
upon  the  tierce  opposition  of  Muracciole; 

As  for  what  concerns  the  intervention  of  Duhamel  and  consorts, 
that  it  is  proper  for  the  above  reasons  to  sustain  their  conclusion> 
which  ask  for  the  rejection  of  the  tierce  opposition; 

For  these  reasons; 

The  tribunal  admits  Lemarquis  and  Couaillier  as  tiers-opposants  to 
the  judo-ments  of  June  29,  1894; 

Admits  the  interventions  of  Muracciole  and  Duhamel  and  others; 

On  the  merits;  declares  Lemarquis,  Couaillier  and  Muracciole 
unfounded  in  their  tierce  oppositions: 

Orders  the  said  judgments  to  be  given  their  full  and  entire  effect: 

Approves,  nevertheless,  Lemarquis7  engagement  with  the  Eiffel 
credit  companies  and  other  companies  concerning  the  time  when  the 
shares  subscribed  by  them  may  be  negotiated; 

Applies  to  Lemarquis,  Couaillier  and  Muracciole  article  479  of  the 
Code  of  Civil  Procedure; 

Consequently  condemns  them  each  to  a  fine  of  50  francs,  combines 
the  costs,  which  include  the  expenses  of  Duhamel  and  consorts; 

Condemns  Couaillier  and  Muracciole  in  the  said  costs  to  the  amount 
of  a  third  for  each; 

Declares  that  the  other  third  shall  be  borne  by  Lemarquis  as  man- 
da  t  aire; 

Makes  allowance  to  de  Bieville  and  Jacob,  solicitors,  of  their  fees. 

(Signed)  Boudouin  and  Laknier. 

Done  and  adjudged  in  public  session,  etc. 


EXHIBIT  M. 

REPORT  OF  OCTOBER  8,  1894,  OF  C<  >MMISSAIRES  APPOINTED  BY  THE 
NEW  PANAMA  CANAL  COMPANY  TO  VALUE  THE  CONTRIBUTIONS 
MADE  TO  IT  BY  THE  LIQUIDATOR. 

[Does  not  seem  to  have  been  published.] 

Gentlemen:  In  our  constitutive  meeting  3-011  selected  us  to  make 
the  report  required  by  law  and  the  by-laws  upon  the  value  of  the  con- 
tributions made  to  your  company  and  upon  the  legitimacy  of  the  advan- 
tages stipulated  by  articles  5,  6,  7.  8,  51,  and  58  of  the  by-laws. 


246 


PANAMA  CANAL  TITLE. 


We  here  render  you  an  account  of  the  mission  which  you  were  pleased 
to  confide  to  us. 

I. 

The  by-laws  of  the  New  Panama  Canal  Company,  according  to  the 
document  received  by  MM.  Lefebvre  and  Champetier  de  Kibes,  nota- 
ries at  Paris,  on  the  26th  of  dune.  L894,  were  the  subject  of  profound 
preliminary  examination  on  the  part  of  M.  ( rautron,  liquidator  of  the  old 
company,  and  of  M.  Lemarquis,  official  mandataire  of  the  bondholders. 

In  conformity  with  the  special  law  of  the  1st  of  July,  1893,  they  were 
afterwards  submitted  to  the  approval  of  the  civil  tribunal  of  first 
instance  of  the  Seine,  which  approved  them  by  judgment  dated  29th 
of  June.  Some  tierce  oppositions  having  been  put  in  to  this  judgment, 
a  new  judgment  of  the  same  tribunal,  dated  the  8th  of  August,  decided 
against  the  opposants  and  maintained  the  provisions  of  the  preceding 
judgment. 

The  authority  of  these  decisions,  which  are  to-day  final,  supported, 
besides,  by  reasonings  of  remarkable  precision,  suliice  assuredly  to 
demonstrate  that  the  by-laws  are  of  the  most  perfect  regularity  and 
that  they  embrace  tin1  best  possible  solution  of  the  difficulties  which 
the  business  of  reconstituting  the  work  of  Panama  has  encountered. 
It  is  always  to  be  remembered  that  the  tribunal  of  the  Seine  had  the 
charge  of  specially  looking  after  the  safeguarding  of  the  interests  of 
the  stockholders  or  bondholders  of  the  Company  of  the  Interoceanic 
Canal  of  Panama. 

If,  then,  the  judicial  control  is  of  such  a  nature  as  to  facilitate  the 
accomplishment  of  the  mission  which  you  have  confided  to  us,  we  are 
not  the  less  obliged  to  examine  and  discuss,  in  conformity  with  the  law 
of  the  24th  of  July.  1867,  the  stipulations  of  the  by-laws,  the  value  of 
the  contributions,  and  the  equity  of  those  stipulations  from  the  point 
of  view  of  the  interests  of  the  new  company,  with  regard  to  the  sub- 
scribers of  money  capital.  Your  commissaires  had  to  deliver  them- 
selves to  this  work  without  regard  to  the  particular  circumstances 
passed  upon  Iry  the  judicial  decisions. 

II. 

The  contribution  made  to  your  company  by  the  liquidator  of  the 
old  company  of  the  Interoceanic  Canal,  and  the  advantages  stipulated 
in  behalf  of  that  liquidation  in  return  for  that  contribution,  are  settled 
by  divers  provisions  of  the  by-laws  which  it  is  important  to  place 
before  you. 

These  articles  are  thus  worded:  [Quoting  the  articles  5,  6,  7,  8,  51, 
52,  and  58;  see  by-laws,  printed  in  full  elsewhere.] 

The  articles  which  we  recall  to  you,  and  the  stipulations  which  they 
contain,  have  two  different  aspects,  the  one  principal  and  concerning 
the  accomplishment  of  the  company's  object,  the  other  subsidiary  and 
which  may  be  ultimately  carried  out  in  consequence  of  a  decision  to 
be  taken  by  a  special  general  meeting  convoked  under  the  terms  of 
article  75. 

We  have,  then,  to  take  account  of  this  double  aspect,  and  we  shall 
examine  successively  the  situation  which  is  produced  at  the  same  time 
for  the  liquidation  and  for  the  new  capital  in  both  of  the  twTo  cases 
ret  erred  to. 


TAX  AM  A   CANAL  TITLE. 


247 


III. 

There  is  to  be  examined  what  belongs  to  the  construction  and  oper- 
ation of  the  canal,  which  are  the  very  objects  of  the  new  company  as 
Befined  by  its  first  article,  as  well  as  the  contribution  of  the  liquidator, 
which  embraces  the  constitutive  elements  of  that  enterprise. 

These  different  elements  should  be  successively  passed  in  review. 

1.  CONCESSION. 

"Allrights,"  say  the  by-laws,  "  resulting  in  behalf  of  the  company  in 
liquidation  from  the  laws  of  the  Government  of  the  United  States  of 
Colombia,  dated  the  L8th  of  May,  1878,  and  26th  of  December,  1890, 
as  well  as  from  the  decrees,  acts,  and  facts  whatsoever  following  in 
execution  of  those  laws,  and  all  the  advantages  stipulated  by  those 
laws  and  decrees,  together  with  all  lands  and  immovable  properties 
granted  to  the  Interoceanic  Company  in  liquidation  or  acquired  by  it. 

"The  whole  with  the  charge  of  fulfilling  the  conditions  of  the  laws 
and  prorogations  of  the  concession,  and  of  paying  all  sums  remaining 
due  from  the  liquidation  to  the  Colombian  Government." 

The  concession  of  the  Panama  Canal,  described  in  these  terms  by 
the  by-laws,  results  from  three  documents  emanating  from  the  Colom- 
bian Government  and  sanctioned  by  the  laws  of  that  Republic. 

The  first  determines  the  clauses  and  provisions  of  the  concession 
made  for  ninety-nine  }rears,  beginning  from  the  day  on  which  the 
canal  shall  be  opened  in  whole  or  in  part  to  the  service  of  the  public, 
or  on  which  the  concessionaires  or  their  representatives  shall  com- 
mence to  receive  payments  for  transit  and  for  navigation. 

The  canal  was  to  be  finished  and  delivered  to  the  service  of  the  pub- 
lic within  twelve  years  from  the  constitution  of  the  company  organized 
by  M.  Ferdinand  de  Lesseps — that  is  to  say,  before  March  3,  1893, 
allowing,  however,  a  supplemental  period  of  six  years. 

Independently  of  the  general  clauses  and  provisions,  there  were 
given  to  the  concessionaires  the  necessary  public  lands  for  the  con- 
struction of  the  canal,  as  well  as  a  strip  of  land  200  meters  wide  on 
each  side  of  the  canal,  and  besides  500,000  hectares  of  land  to  be 
chosen  by  the  concessionaire  company. 

Finally,  the  Colombian  Government  reserved  to  itself  a  participa- 
tion in  the  gross  product  of  all  that  should  be  received  from  the  enter- 
prise, fixed,  to  wit: 

At  5  per  cent,  during  the  first  twent}T-five  years  from  the  opening 
of  the  canal;  at  6  per  cent,  during  the  following  twenty-five  years;  at 
7  per  cent,  from  the  fiftieth  to  the  seventy-fifth  year,  and  at  8  per  cent, 
from  the  seventy-fifth  year  to  the  end  of  the  concession. 

Following  the  suspension  of  the  works  of  the  old  company,  the 
Colombian  law  of  December  26,  1890,  was  passed  on  the  petition  of 
m.  Monchicourt,  then  liquidator  of  the  old  company. 

A  prorogation  of  ten  years  was  granted,  on  condition  that  a  new 
company  of  construction  should  be  formed  and  should  recommence  the 
work  of  excavation  in  a  serious  and  permanent  manner,  at  the  latest, 
by  February  28,  1893. 

Finally,  the  terms  of  the  prorogation  were  definitively  arranged  in 
the  following  manner  on  the  1th  of  April,  1893: 

The  prorogation  of  ten  years,  given  in  article  first  of  the  law  of  1890, 


248 


PANAMA  CANAL  TITLE. 


to  the  liquidator  of  the  Universal  Panama  Canal  Company  to  remain  in 
force  under  the  conditions  then  stipulated,  except  as  tothe  second,  which 
was  modified  by  the  prorogation,  until  31st  of  October,  L894,  of  the 
period  within  which  the  new  company  was  to  he  constituted,  and  the 
works  of  tin1  canal  to  he  recommenced  in  a  serious  and  permanent 
manner. 

The  term  of  ten  years  to  commence  to  run  from  the  date  of  the 
definitive  constitution  of  the  new  company. 

It  is.  then,  the  definitive  constitution  of  the  present  company  which 
determines  the  point  of  beginning  of  the  ten  years. 

Besides,  these  different  laws  contained,  for  the  benefit  of. the  Colom- 
bian Government,  the  following  advantages: 

1.  The  receipt  of  5,000,000  francs  in  paid-up  shares  of  the  new 
company. 

This  was  effected  by  articles  5  and  6  of  the  by-laws. 

2.  The  obligation  of  the  liquidator  and  the  neAv  company  to  pay  to 
the  Government  of  Colombia  without  deduction,  the  sum  of  8,000,000 
in  gold,  payable  as  follows: 

Five  hundred  thousand  francs  before  the  31st  of  December  last 
(1893).    This  sum  was  paid  punctually  by  the  liquidator. 

And  7,500,000  francs  surplus  which  remains  at  the  charge  of  your 
company,  in  four  payments,  year  after  year,  the  first  to  be  made  three 
months  after  the  definitive  constitution  of  the  new  company.  The  first 
of  these  installments  will  be  of  1,500,00* >  francs  and  the  three  others 
of  2,000,000  francs  each. 

3.  The  maintenance  at  the  cost  of  the  company  of  the  armed  force 
necessary  for  the  preservation  of  order  and  the  security  of  the  canal. 

1.  Participation  by  the  Colombian  Government  in  the  gross  pro- 
ceeds of  the  enterprise  according  to  the  terms  above  mentioned. 

5.  The  right  of  the  Government  of  Colombia  to  name,  whenever  it 
shall  judge  useful,  a  special  delegate  to  the  council  of  administration 
of  the  company,  who  snail  enjoy  the  same  rights  as  those  given  to  the 
other  administrators  by  the  by-laws  of  the  company. 

6.  The  maintenance  in  the  hands  of  the  Colombian  Government  of 
the  guarantee  of  750,000  francs  paid  hy  the  company  in  liquidation. 
This  guarantee  is  comprised  in  the  contribution  which  is  made  to  you 
by  the  company  in  liquidation. 

Such  is  the  general  scheme  of  agreements  of  concession,  which  car- 
ries for  the  company  serious  charges,  but  which  includes  at  the  same 
time — with  the  long  period  of  concession,  with  the  granting  of  the  soil 
of  the  canal  and  of  its  banks,  and  the  right  to  500,000  hectares  of  pub- 
lic land,  with  the  monopoly  of  the  transit,  and  of  the  conditions  on 
which  such  transit  is  practicable — all  the  elements  of  a  great  enter- 
prise. 

2.   WORKS,  CONSTRUCTIONS,  MATERIEL. 

"The  works  executed,  the  plants,  workshops,  buildings,  hospitals, 
materiel  mounted  and  not  mounted,  materials  and  supplies,  etc., 
belonging  to  the  Universal  Company  of  the  Interoceanic  Canal  in 
liquidation,  as  well  as  all  guaranties  which  may  have  been  deposited 
by  the  said  company  in  liquidation.'' 

As  for  the  guaranties,  this  concerns  the  750,000  francs  paid  over  to 
the  Colombian  Government  by  the  old  company,  and  which  that  Gov- 
ernment keeps  in  its  hands,  as  we  have  above  stated.. 


PANAMA  CANAL  TITLE. 


249 


As  to  the  remainder  of  this  part  of  the  contribution,  it  embraces  in 
this  enumeration  all  the  work  accomplished  by  the  old  company  of  the 
[nteroceanic  Canal  during  the  eight  years  of  its  existence,  from  1880 
to  IS88. 

It  would  be  rash,  gentlemen,  to  undertake  to  appraise  in  an  abso- 
lute manner  the  real  worth  of  this  asset. 

We  do  not  need  for  the  accomplishment  of  our  mission  to  enter  upon 
the  examination  of  the  carrying  on  of  the  old  company  and  we  scrupu- 
lously abstain  from  expressing  any  opinions  on  thai  subject.  Itsuffices 
to  state,  leaving  out  the  question  of  expense,  that  the  work  accom- 
plished by  the  old  company  represents  a  considerable  part  of  the  task 
in  hand  and  that  the  materiel  and  the  supplies  can  be  made  use  of,  at 
least  for  the  greater  part. 

On  this  subject  we  find  all  the  assurances  necessary,  in  the  reports 
of  the  commission  of  examination  appointed  by  the  first  liquidator,  M. 
Brunet,  presided  over  by  M.  Guillemain,  inspector-general  of  roads, 
bridges,  and  canals,  of  the  5th  of  March,  1890- 

We  place  two  extracts  before  you. 

Division  II — Technical  Report  on  the  Canal  with  Locks,  page  66: 

The  execution  of  the  works  is  entirely  subject  to  the  utilization  of  the  materiel  and 
the  installations  existing.  It  is  with  regard  to  these  that  the  calculation  of  expenses 
has  been  made.  Without  departing  from  the  exclusively  technical  character  of  this 
report,  it  is  proper  to  give  some  information  on  this  subject. 

The  materiel  on  the  Isthmus  has  an  importance  which  the  commission  can  not 
ignore.  It  embraces  objects,  the  acquisition,  the  transporting,  the  mounting  in  place 
of  which  have  cost  150,000,000. 

The  delegation  sent  to  the  Isthmus  has  stated  that  the  classification,  putting  in  con- 
dition, the  preservation  of  the  divers  implements  neglected  by  the  contractors  on  the 
embankments  or  at  the  bottom  of  ditches  have  been  methodically  pursued  since  the 
suspension  of  the  works.  The  workshops  are  in  good  condition,  a  perfect  order 
reigns  in  the  storehouses,  and  the  materiel  seen  upon  the  plants  has  been  cleaned 
with  care  and  put  into  condition  to  resist  the  atmospheric  influences. 

In  the  course  of  its  movements  the  delegation  had  occasion  to  see,  besides,  the 
operation  of  several  locomotives,  steam  launches,  and  divers  apparatus,  which  oper- 
ated well. 

On  the  other  hand,  it  caused  to  be  operated  in  its  presence,  upon  only  forty-eight  - 
hours'  notice,  two  excavators  and  a  dredge  at  Culebra,  a  marine  dredge  at  La  Boca, 
and  several  loading  derricks.    The  experiments  were  satisfactory. 

There  is,  then,  on  the  Isthmus  a  materiel  of  real  value.  However,  the  commission 
has  not  been  able  to  reduce  this  value  to  figures,  for  it  is  purely  conditional,  almost 
nothing,  if  the  works  are  not  continued;  on  the  contrary,  it  becomes  very  valuable 
for  a  new  company,  which  will  find  in  employing  it  the  possibility  of  immediately 
starting  the  work. 

That  which  the  commission  believes  that  it  can  affirm  is  that,  except  perhaps 
some  special  machines,  this  materiel  answers  all  requirements.  Whatever  methods 
may  be  adopted,  the  dredges  of  all  kinds,  the  excavators,  the  loading  derricks,  the 
rails,  locomotives,  and  earth  cars  are  amply  sufficient. 

The  commission  has  not,  accordingly,  estimated  in  its  calculation  any  new  acqui- 
sition. The  amount  which  it  has  given  includes  only  the  care  and,  upon  occasion, 
the  renewing  of  the  implements  by  future  constructors. 

The  installations  of  the  workshops  are  also  ample.  The  three  principal  ones  are 
at  Colon,  at  Matachin,  and  La  Boca.  Some  installations  of  less  importance  are  scat- 
tered along  the  line.  These  establishments  and  the  divers  implements  pertaining 
to  them  are  more  than  sufficient  to  make  all  repairs  of  materiel  necessary  for  active 
work. 

As  to  the  dwellings  for  the  personnel  and  the  workmen,  their  number  is  enormous 
and  seems  even  too  great,  since  they  permit  to  be  lodged  26,000  to  27,000  workmen. 
Under  this  head  there  is  no  expense  to  be  provided  f<  >r. 

Thanks  to  the  materiel  and  the  installations  which  are  found  in  place,  the  new 
company  will  be  able,  then,  immediately  to  attack  the  hill  at  Culebra  and  to  under- 
take the  rest  of  the  works  without  any  other  delay  than  that  rendered  necessary  for 
the  new  studies  and  examinations  upon  the  points  which  we  have  specially  mentioned. 


250 


PANAMA  CANAL  TITLE. 


Division  I. — General  Report,  page  51: 

In  that  report  the  commission  even  examined  the  hypothesis  of  a 
contribution  to  a  new  company.     It  expressed  itself  in  these  terms: 

If  one  considers  the  contributions  of  the  two  parties  in  the  contract  to  be  made,  he 
will  find  himself  in  the  presence  of  a  very  complex  situation.  The  new  company 
contributes  the  capital  for  the  first  requirements,  without  which  the  work  can  not 
be  accomplished.  The  loss  will,  then,  be  permanent,  and  its  intervention,  absolutely 
indispensable,  creates  for  it  preponderating  rights.  But,  on  the  other  hand,  it  can 
not  dispose  of  the  materiel  or  the  establishments  of  the  old  company.  This  latter,  a 
fact  not  to  be  lost  from  sight,  is  still  at  present  the  sole  concessionnaire*  It  has,  as  such, 
rights  which  are  precisely  those  of  the  old  subscribers,  and  it  is  not  prudent  for  the 
latter  to  diminish  their  value,  as  some  in  these  latter  times  seem  to  have  undertaken 
the  task  of  doing. 

These  rights  are  very  clearly  established  by  the  law  of  May  18,  1878.  They  will  not 
be  extinguished  before  1899,  if  at  that  time  the  canal  shall  not  be  navigable,  and 
therefore  they  constitute  a  privilege  with  which  it  is  necessary  to  reckon. 

Moreover,  in  that  new  country,  where  everything  is  to  be  created,  a  new  company 
will  find  it  very  difficult  to  get  along  without  the  concurrence  of  the  old,  without 
exposing  itself  in  its  turn  to  grave  mistakes. 

The  old  company  contributes  its  materiel,  numerous  establishments,  its  supplies, 
its  lands  which  it  has  acquired  with  its  money,  those  which  are  granted  to  it  by  the 
act  of  concession,  and  the  works  already  executed. 

The  materiel,  the  acquisition  of  which  with  its  transportation  and  mounting  have 
cost  150,000,000,  is  in  good  condition,  although  to  some  extent  worn.  In  the 
opinion  of  the  commission  it  will  suffice,  such  as  it  is,  for  the  construction  of  the 
canal  if  the  method  of  carrying  on  the  work  is  not  changed,  and  will  thus  dispense 
with  creating  a  new  materiel. 

The  fixed  establishments,  hospitals,  lodgings,  workshops,  etc.,  are  indispensable 
to  a  new  company,  as  they  were  to  the  old.    They  cost  52,000,000. 

But,  on  the  one  hand,  they  no  longer  have  their  original  intrinsic  value.  On  the 
other  hand,  the  old  company  has  not  free  and  complete  possession  of  them,  since  in 
case  of  failure  they  remain,  without  having  to  be  paid  for,  the  property  of  Colombia. 

That  is  a  condition  which  Leaves  t  hem  but  a  value  for  ns< — in  8<  ime  sort  conditional — 
in  the  absence  of  a  new  arrangement  between  the  interested  parties,  including  the 
( rovernment  of  Colombia. 

The  lands  received,  or  to  be  ultimately  received,  are  likewise  to  return  to  Colombia 
if  the  canal  is  not  completed  within  the  time  fixed.  They  are  not,  then,  an  assured 
property,  but  a  conditional  resource,  which  may  become  considerable,  since  the 
amount  of  land  which  will  be  granted  to  the  canal  in  case  of  its  accomplishment  will 
be  500,000  hectares;  but  it  is  impossible  to  give  figures  as  to  this  at  a  time  when  a 
crisis  puts  everything  in  doubt. 

As  to  the  volume  of  excavations  to  be  made  use  of,  in  view  of  the  total  excava- 
tions, the  commission  has  not  been  able  to  give  figures  even  approximately.  The 
sea  channels  of  the  canal  are  in  an  advanced  state,  outlet  ditches  have  been  dug,  the 
trenches  have  been  attacked  throughout  to  a  greater  or  less  depth,  and,  in  fine, 
according  to  the  statements  furnished,  the  number  of  cubic  meters  removed  has  been 
nearly  50,000,000,  which,  taking  account  of  the  special  expenses  incurred  by  the 
company,  have  caused  an  expense  of  489,000,000.  But  there  have  been  false 
steps  taken,  it  is  said.  An  important  part  of  the  excavations  undertaken  with  a 
view  to  the  construction  of  the  canal  at  sea  level  are  no  longer  of  the  same  use  to  a 
canal  with  locks.  Numerous  accidents  have  taken  place,  as  to  which  it  is  impossible 
to  determine  after  the  fact,  the  part  to  be  attributed  to  improvidence  and  that  which 
resulted  from  the  natural  condition  of  the  country.  Time  finally  has  performed  its 
work,  and  the  soil,  such  as  it  is  to-day,  does  not  permit  examination,  which,  in  any 
case,  would  be  very  difficult  even  at  the  time  when  the  events  occurred. 

If  we  add  here  the  uncertainties  which  proceed  from  the  execution,  due  partly  to 
great  constructors,  partly  to  employees,  partly  to  the  management,  the  complica- 
tions produced  by  the  rescissions  of  contract  agreed  upon,  and  which  were  carried 
out  by  the  parties,  it  can  be  understood  that  the  commission  should  restrict  itself  in 
the  task,  already  very  burdensome,  and  which  it  was  to  accomplish  within  the  least 
possible  time,  of  making  an  estimate  as  to  what  remains  to  be  done. 

Finally,  and  to  furnish  data  which  should  be  considered  simply  as  an  intuitive 
estimate,  the  commission  thinks  that,  taking  account  of  the  immense  materiel  in 
place  and  ready  to  be  used,  the  numerous  establishments  created,  the  lands  received 
and  to  be  received,  the  work  done,  the  experience  acquired,  the  supplies  and  the 
plans  prepared,  as  well  as  the  concession  itself,  the  contribution  of  the  old  company 


PANAMA  CANAL  TITLE. 


251 


may  bo  looked  upon  as  the  equivalent  of  one-half,  at  least,  of  the  expense  of 
!><)( ),()()(), 000  remaining  to  he  laid  out. 

It  is  true  that  this  contribution  has  no  real  value  except  for  a  new  company  reor- 
ganized to  profit  by  it,  as  the  old  one  profited  by  it.  It  is  reduced,  on  the  contrary, 
to  an  insignificant  value  if  the  works  are  stopped,  and  this  it  is  that  renders  the 
situation  so  difficult  and  so  confused  for  the  old  subscribers. 

This  way  of  looking  at  things  is  similar  to  that  of  the  Colombian 
Government,  since  in  its  dispatch  of  October  26,  188S,  the  minister  of 
finance  expressed  himself  thus: 

Considering  from  the  facts  shown  in  the  aforesaid  memoire,  it  results  that  the 
work  performed  for  the  construction  of  the  interoceanic  canal  represents,  at  the 
present,  more  than  the  half  of  the  work  which  the  total  construction  of  the  canal 
implies,  and  that,  consequently,  the  Universal  Company  of  the  said  Interoceanic 
(/anal  has  acquired  the  perfect  right  to  have  adjudged  to  it  the  one-half  of  the  free 
lands  mentioned  in  article  4  of  the  law  of  1878. 

And  in  this  estimate  the  Colombian  Government  included,  as  did 
the  commission,  and  even  more  than  it,  the  false  cost  of  the  work,  as 
is  shown  by  the  following*  passage  of  the  dispatch  of  the  3d  of  Jan- 
uary, 1884: 

That  the  representative  of  the  canal  company  and  its  special  delegate  be  informed 
that  the  executive  power  is  agreed  that  this  question,  as  all  questions  arising  from 
the  interpretation  of  the  contract  for  the  great  work  of  the  excavation  of  the  canal, 
should  be  treated  with  the  greatest  elevation  of  views,  looking  rather  to  the  spirit 
than  the  letter  of  the  contract;  that,  consequently,  the  Government  admits  and  con- 
siders as  work  done  for  the  accomplishment  of  the  canal,  not  only  the  quantity  of 
earth  removed,  or  the  cubic  meters  cut  for  the  opening  of  the  said  canal  (which 
conforms  to  the  letter  of  the  contract,  but  not  to  the  good  faith  with  which  it  ought 
to  be  carried  out),  but  also  the  capital  brought  together  to  accomplish  the  undertak- 
ing, the  technical  and  scientific  studies  for  the  laying  out  of  the  route  and  the  execu- 
tion of  the  work,  the  formation  of  the  company,  and  the  organization  of  the  works, 
the  transportation  to  the  Isthmus  of  a  great  part  of  the  machines  and  materiel  of 
excavation,  and  the  part  already  in  fact  constructed,  and,  after  having  taken  all  these 
into  consideration,  the  executive  power  declares  that  the  Panama  Canal  Company 
has  the  right  to  have  adjudged  to  it,  according  to  the  terms  of  said  article,  150,000 
hectares  as  the  equivalent  of  a  little  more  than  one-third  of  the  execution  of  the  work. 

If  the  Colombian  Government  upon  the  report  of  its  agents  consid- 
ered as  one-third  accomplished  in  1884:  the  execution  of  the  canal  at 
sea  level,  the  proportion  which  the  commission  adopts  in  1890  for  a 
canal  with  locks  is  not  unreasonable. 

There  is  less  excavation  to  be  done  for  a  canal  at  sea  level,  but  much 
more  of  masonry  work. 

Since  1886  great  movements  of  earth  have  been  effected,  but  on  the 
one  hand  some  of  these  were  useless;  on  the  other  hand,  the  total 
cubic  excavation  is,  by  reason  of  the  nature  of  the  land,  very  much 
greater  than  was  foreseen  in  the  beginning,  and  it  is  not  surprising 
that,  all  compensations  made,  the  situation  is  a  little  less  advanced,  and 
is  made  worse,  moreover,  by  the  grave  fact  that  time  has  passed  and 
that  the  date  of  forfeiture  is  threateningly  near. 

As  far  as  we  are  concerned  we  can  not  give  our  adhesion  to  the  esti- 
mate of  450,000,000  which  the  committee  of  examination  considers 
itself  able  to  present,  although  under  great  reservations.  We  think 
it  is  not  possible  to  advance  a  precise  figure,  which  would  necessarily 
be  arbitrary.  But  we  do  not  hesitate  to  think,  and  you  will  doubtless 
think  with  us,  that  the  statements  of  the  commission  suffice  to  estab- 
lish the  conviction  that  this  part  of  the  contribution  has,  in  any  case, 
a  value  of  such  a  nature  as  to  justify  the  part  of  the  profits  which  the 
liquidator  of  the  old  company  lias  stipulated  for. 


252 


PANAMA  CANAL  TITLE. 


As  to  the  present  state  of  the  materiel  and  the  works,  we  think  we 
can  accept  with  confidence  the  last  report  of  the  liquidator,  dated  the 
21st  of  April.  1894.  While  it  is  true  that  that  document  emanates 
from  the  contributor  himself,  to  whom  we  are  the  opposite  parties,  it 
is  considered  that  he  has  presented  it  to  the  tribunal  under  his  respon- 
sibility as  judicial  mandataire,  rendering  an  account  of  his  proceedings. 

We  read  in  that  report: 

If  it  is  observed  that  the  works  have  been  suspended  for  more  than  four  years  and 
a  half,  if  is  considered,  besides,  the  inevitable  action  of  a  climate  such  as  that  of  the 
Isthmus,  it  is  not  astonishing  that  the  plants  and  materiel  have  undergone  some  loss 
and  deterioration.  The  effects  of  time  and  of  the  climate  having  been  foreseen,  the 
liquidator  sought  with  great  care  to  prevent  them.  He  can  affirm  that,  thanks  to 
the  measures  which  he  caused  to  be  taken,  these  effects  have  been  relatively  of  little 
importance  and  can  be  easily  remedied. 

The  report  contains  afterwards  circumstantial  details  as  to  each  sec- 
tion of  the  works,  and  as  to  the  different  kinds  of  the  materiel,  which 
confirm  these  assertions. 

As  to  what  concerns  the  materiel  properly  so-called,  a  statement  was 
drawn  up  in  the  course  of  the  liquidation  (Exhibit  C  to  the  report  of 
the  12th  of  November.  1891),  and  has  been  communicated  to  your 
commissaires. 

3.   STUDIES  AND  DOCUMENTS. 

"The  plans.  drawings,studies  of  all  kinds  in  the  hands  of  the  Inter- 
oceanic  Company  and  concerning  in  any  way  whatever  the  study,  the 
execution,  or  the  operation  of  the  canal,  or  its  accessories,  as  well  as 
the  benefits  of  all  agreements  with  third  persons." 

It  is  useless  to  dwell  upon  this  paragraph,  which  explains  itself. 
Your  company  having  the  same  end  and  object  as  the  old  company,  all 
studies  and  documents  brought  together  by  your  predecessors  will 
contain  useful  information  and  facilitate  your  task,  and  throw  light 
on  your  course  in  the  future. 

4.   PANAMA  RAILROAD. 

"  The  rights  of  all  kinds,  shares  of  ownership  or  others  whatsoever 
which  may  belong  to  the  Universal  Company  of  the  Interoceanic 
Canal  in  liquidation  as  to  the  railroad  from  Panama  to  Colon." 

The  rights  in  question  were  comprised  in  the  contribution  of  the 
liquidator  in  the  same  way  as  the  other  elements  of  that  contribution, 
and  should  be  examined  in  the  same  manner. 

The  special  agreements  on  this  subject  which  have  been  inserted  in 
the  by-laws,  with  the  view  to  a  particular  event,  will  be  discussed 
separately  in  the  last  paragraph  of  our  work.  This  reservation  made, 
let  us  examine  their  direct  value. 

The  railroad  belongs  to  a  special  anonymous  company  whose  head- 
quarters are  at  New  York. 

The  rights  of  the  liquidator  represent  f  f  f  M  of  the  capital  of  that 
companv.  This  capital  is  of  87.000,000,  which  at  the  rate  of  exchange 
fixed  of  5.20  per  dollar  is  worth  36,400,000  francs;  that  is  to  say,  for 
the  mU  a  sum  at  par  of  35,637,680  francs.  The  1,466  shares 
belonging  to  third  persons,  other  than  the  liquidator,  appear  to  give 
rise  to  very  infrequent  transactions  and  are  not  officially  quoted  on  the 
stock  exchange  of  New  York.  We  do  not  definitely  know  what  has 
been  their  market  value.    The  sole  information  which  we  are  able  to 


PANAMA  CANAL  TITLE. 


253 


give  is  the  value  of  175  francs  or  thereabouts  during  the  month  of 
August  last.  Finally,  we  give  the  table  of  dividends  since  the  origin 
of  the  company  in  hundreds  of  dollars: 


Year. 

Dollars. 

Year. 

Dollars. 

Year. 

Dollars. 

1876  

12 
12 
12 
13 
16 

34. 26 

1882  

12.50 
13.50 
16 
10 

Nothing. 
6 

1888  

26 
9 
5 
5 
2 

Nothing. 

1877  

1883  

1889  

1878  

1884  

1890  

1879  

1891  

1880  

1886  

1892  

1881  

1887  

1893  

Leaving  out  the  period  from  1881  to  1888,  which  was  that  of  the 
activity  of  the  old  company,  and  which  is  consequently  abnormal  in 
all  respects,  the  preceding  table  indicates  clearly  that  the  Panama  Kail- 
road  gave  from  1876  to  1880  a  high  revenue,  varying  from  12  to  16 
per  cent,  whereas  from  1889  to  1893  the  revenue  fell  gradually  from 
9  per  cent  to  zero. 

The  present  situation  of  the  railroad  is  not,  therefore,  favorable. 

We  should  go  beyond  the  object  of  our  mission  if  we  should  enter 
upon  details  as  to  the  causes  of  this  condition  of  things  and  the  means 
of  remedying  it.  We  shall  have  to  limit  ourselves  to  a  few  summary 
observations. 

It  appears  that  the  present  revenues  of  the  railroad  can  be  raised  to 
a  higher  plane  by  the  conclusion  of  new  agreements  with  steamship 
companies.  The  liquidation  has  rightly  made  use  of  its  influences  to 
prevent  the  renewing  of  old  agreements  in  order  to  leave  complete 
liberty  of  action  for  the  future.  The  development  of  the  traffic  can, 
besides,  be  favored  b}r  the  improvement  of  the  terminal  facilities  of 
the  railroad  at  the  two  oceans.  Finally,  it  is  certain  that  the  recom- 
mencing of  the  works  on  the  Isthmus  will  give  rise  to  considerable 
transportation,  by  which  the  railroad  will  profit.  Your  company  itself 
will  pay  for  a  great  part  of  that  transportation. 

But  however  that  may  be,  and  whatever  the  present  money  value  of 
the  railroad,  and  of  whatever  improvement  the  railroad  and  its  future 
revenues  arc  susceptible,  the  contribution  which  is  made  to  }tou  of  the 
rights  of  the  liquidation  has  advantages  which  we  do  not  hesitate  to 
call  fundamental.  Every  enterprise  for  the  cutting  of  the  canal  must 
necessarily  reckon  with  the  railroad  company  and  has  need  of  its  aid. 
It  is  important,  then,  in  the  highest  degree,  to  have  a  serious  influence 
in  it,  and  therefore  it  was  necessary  that  the  liquidation  should  transfer 
to  you  its  rights. 

You  will  find,  by  wa\T  of  exhibit  to  this  report,  the  last  balance 
sheet  to  the  Panama  Railroad  of  December  31,  1893. 

IV. 

In  return  for  this  various  contribution,  of  which  we  have  undertaken 
to  show  you  the  outlines,  the  extent,  •and  the  different  elements,  what 
are  the  charges  which  the  by-laws  impose  upon  your  company?  And 
what  are  the  advantages  stipulated  in  favor  of  the  liquidation  of  the 
old  compan}^? 

In  the  first  place,  the  liquidation  imposes  on  the  new  company  the 
executing  of  the  divers  financial  obligations  in  favor  of  Colombia 


254 


PANAMA    (AAA J.   TiTJ JA 


which  result  from  the  original  contract  of  concession  and  the  two  laws 
of  prorogation.  We  specified  these  above  and  do  not  need  to  return 
to  them.  These  are  the  charges  inherent  in  the  very  object  of  the 
enterprise  and  which  ought  to  fall  to  you  without  any  possible  discus- 
sion, in  our  opinion,  as  a  natural  consequence  of  the  substitution  of 
your  company  to  the  old  company. 

Let  us  pass  to  those  stipulated  for  the  liquidator. 

1.  He  has  reserved  the  power  to  establish,  up  to  the  time  of  com- 
pleted construction  of  the  canal,  a  commission  of  examination  and 
inspection  whose  remuneration  shall  be  at  the  charge  of  your  company. 
This  commission  of  examination  appears  to  us  to  be  absolutely  justi- 
fied b}T  the  considerable  interest  which  the  liquidator  preserves  in  the 
new  company,  and  can  be  for  your  company,  and  for  the  stockholders, 
only  a  guaranty  and  a  safeguard  which  they  should  be  the  first  to 
welcome. 

2.  The  preferential  right  to  subscribe  to  half  of  the  present  money 
capital  of  00,000,000  and  the  totality  of  future  issues  in  ease  of 
increase  of  the  capital  has  been  reserved  for  the  benefit  of  the  stock- 
holders and  bondholders  of  the  old  company. 

The  right  to  subscribe  to  half  of  the  present  capital  of  this  company 
has  been  exercised  in  part,  and  those  who  have  made  use  of  that  privi- 
lege appear  to-day  among  you.  The  other  subscribers  have  given  their 
adhesion  with  perfect  knowledge  of  the  right  of  preference  as  to  the 
future  increase  of  the  capital.  This  agreement  seems  to  us  perfectly 
lawful;  we  do  not  think  it  requires  any  observation  from  us. 

It  is  but  another  proof  of  the  ties  which  will  bind  the  new  company 
to  those  interested  in  the  old  company,  and  the  facilities  which  are 
accorded  to  them  can  not  be  other  than  favorably  received. 

3.  Finally,  and  this,  properly  speaking,  is  the  only  advantage  which 
results  from  the  by-laws,  the  Liquidator  as  such,  has  had  accorded  to 
him  60  per  cent  of  the  net  profits  of  the  enterprise. 

The  liquidation  does  not  ask  of  the  new  capital  any  present  sacrifice 
by  way  of  immediate  payment  in  money,  by  way  of  paid-up  shares 
coming  into  equal  consideration  with  the  shares  subscribed  in  money, 
in  addition  to  the  charges  imposed  by  the  Government  of  Colombia. 
It  is  only  upon  the  development  of  the  work  and  upon  the  profits  to 
arise  when  once  the  canal  is  constructed  and  open  to  public  use  that 
the  liquidation  asks  a  participation,  becoming  thus  your  associate  and 
accepting  the  risks  of  the  enterprise  in  order  to  receive  with  you  the 
hoped-for  profits. 

As  to  that  proportion  of  60  per  cent,  it  is  to  be  noted  in  the  begin- 
ning that  it  is  to  be  calculated  on  the  net  profits  only,  according  to 
the  terms  of  article  51:  that  is  to  say.  after  the  payment  of  the  fol- 
lowing charges: 

1.  The  participation  stipulated  in  favor  of  the  Colombian  Govern- 
ment: 

2.  The  general  expenses  of  all  kinds  and  the  expenses  growing  out 
of  bond  issues; 

3.  The  legal  reserve  fixed  by  the  law; 

4.  The  payment  of  5  per  cent  of  the  company  capital,  in  order  to 
constitute  a  sinking  fund,  as  also  to  serve  as  an  interest  on  the  shares 
of  the  capital  stock;  and 

5.  The  remuneration  at  5  per  cent  of  the  council  of  administration. 
This  concession  of  60  per  cent,  with  the  deductions  aforesaid,  and 


PANAMA  CANAL  TITLE. 


255 


which  include,  it  is  important  to  insist,  the  taking  out  of  5  percent  of 
the  company  capital,  present  or  future,  in  the  way  of  interest  or  sink- 
ing fund,  appears  to  us  to  correspond  very  exactly  with  the  respective 
rights  of  the  old  and  the  new  company.  We  consider  it  perfectly 
equitable. 

We  conclude,  then,  with  recommending  that  you  accept  the  contri- 
bution of  the  liquidator  and  approve  the  clauses  and  provisions  con- 
cerning it. 

V. 

It  remains,  however,  to  treat  of  a  special  and  important  question. 

Up  to  the  present  we  have  discussed  and  commented  upon  the 
clauses  and  conditions  of  the  contribution  applicable  from  the  constitu- 
tion of  your  company,  and  which  will  be  maintained  if  it  succeeds  in 
accomplishing  the  object  of  its  constitution,  and  pursues  the  construc- 
tion of  the  canal. 

But  on  the  side  of  that  principal  situation,  which  we  hope,  as  you  do, 
will  be  the  only  one  to  be  dealt  with,  the  by-laws  have  provided  for  a 
subsidiary  hypothesis,  that  of  your  not  being  able  to  construct  the 
canal,  and  for  the  event  of  that  hypothesis  being  realized  in  spite  of 
all  efforts,  there  have  been  provided  special  agreements  so  far  as  con- 
cerns the  rights  of  the  liquidation  as  to  the  railroad  from  Panama  to 
Colon. 

We  think  we  should,  for  greater  clearness,  reproduce  here  in  bold 
type  article  5,  paragraph  4,  and  article  75  of  the  by-laws: 

*  *  *  *  *  -X-  * 

These  provisions  are  very  clear. 

Your  company  will  have,  from  the  day  of  its  constitution,  the  owner- 
ship of  the  rights  of  the  liquidator  as  to  the  Panama  Railroad;  it  alone 
will  have  the  enjoyment  and  exercise  of  them,  and  there  is  not  imposed 
upon  it  at  present  any  charge  except  those  of  which  we  have  already 
given  you  an  account. 

Only,  according  to  future  events,  the  conditions  under  which  the 
transmission  of  these  rights  is  made  to  you  may  vary. 

If,  after  the  experimental  period  and  the  serious  recommencing  of 
the  works,  which  will  constitute  the  first  phase  of  your  company's 
existence,  you  find  yourselves  in  a  position  to  pursue  the  accomplish- 
ment of  the  canal,  the  contribution  by  M.  Gautron  as  to  the  Panama 
Railroad  will  remain  pure  and  simple.  Your  company  will  have 
nothing  to  pay  to  the  liquidation  and  it  will  remain  proprietor  of  the 
rights  in  question,  except  for  the  forfeiture,  in  case  it  should  not  carry 
out  its  engagements.  If,  on  the  contrary,  when  this  phase  shall  reach 
its  end,  the  necessary  provision  for  the  accomplishment  of  the  canal 
shall  not  be  made,  we  will  still  preserve  the  rights  as  to  the  Panama 
Railroad,  but  your  company  will  have — 

1.  To  pay  to  the  liquidation  an  indemnity  of  20,000,000  francs; 

2.  To  give  it  one-half  of  its  profits  without  subtraction  other  than 
those  provided  for  in  paragraphs  2  and  3  of  article  51  of  the  by-laws. 

We  remark,  in  the  beginning,  that  the  part  of  the  profits  reserved  to 
the  liquidation  in  this  subsidiary  hypothesis  differs  considerably  from 
that  wmich  is  assured  to  it  in  case  the  enterprise  shall  pursue  its 
normal  development. 

In  the  latter  case  the  part  of  the  benefits  is  the  60  per  cent  of  that 
which  remains  after  the  stockholders  of  }7our  company  have  taken  out, 


256 


PANAMA  CANAL  TITLE. 


by  way  of  interesl  or  sinking  fund,  a  sum  equal  to  5  per  cent  of  the 
amount  of  the  company's  capital.  In  the  subsidiary  Hypothesis  the 
part  of  the  liquidation  is  50  per  cent  of  the  gross  receipts,  with 
the  sole  deduction  of  expenses  of  all  kinds  and  the  legal  reserve,  with- 
out any  subtraction  for  interest  and  sinking  fund.  These  special 
conditions  are,  then,  much  more  onerous. 

Are  the}7  equitable?    That  is  what  we  have  to  determine. 

We  cannot  pass  over  in  silence  the  reasonings  concerning  the  Pan- 
ama Railroad  contained  in  the  judgment  dated  the  8th  of  August, 
181*4,  by  which  the  tribunal  of  the  Seine  has  rejected  the  tierce  oppo- 
sitions directed  against  the  approval  of  your  by-laws. 

Considering,  so  far  as  concerns  more  especially  the  contribution  of  the  rights  as 
to  the  railroad  from  Panama  to  Colon,  that  it  is  an  essential  condition  and  basis  of 
the  new  combination,  not  only  on  account  of  the  necessary  correlation  of  the  two 
enterprises,  but  because  it  permits  to  be  assured  a  legitimate  remuneration  to  the 
capital  of  the  new  company,  in  case  the  accomplishment  of  the  canal  should  be 
definitively  abandoned;  that  it  is  important  to  note  that  the  cession  of  these  rights  is 
only  conditional;  that  they  will  return  to  the  liquidation  if  the  accomplishment  of 
the  canal,  having  been  decided  by  the  general  meeting,  it  can  not  be  terminated  by 
the  time  fixed  in  the  act  of  concession;  that  this  forfeiture  guarantees  completely,  on 
that  hypothesis,  the  interest  of  the  Liquidation,  and  that  no  criticism  can  be,  or  is, 
directed  against  the  by-laws  under  that  head;  that  it  is  the  same  so  far  as  concerns 
the  contribution  to  the  new  company  <»f  the  said  rights  in  case  of  the  completion  of 
the  canal;  that  the  revenues  of  the  railroad  will  add  in  that  case  to  the  products  of 
the  canal,  and  will  benefit  consequently  the  liquidation  to  which  is  conceded  three- 
fifths  of  the  profits  of  the  undertaking;  that  if  these  rights  are  to  remain  the  property 
of  the  new  company,  in  case  the  general  meeting  should  not  take  the  steps  necessary 
for  the  accomplishment  of  the  canal,  the  liquidation  will,  on  that  hypothesis,  not 
receive  merely,  as  the  tierce  opposant  seems  to  believe,  an  indemnity  of  20,000,000 
francs,  but  a  half  share  of  the  profits;  that  the  only  deductions  authorized  in  that 
case  being  those  of  the  expense  of  maintenance  and  operation,  expenses  of  admin- 
istration and  the  taking  out  of  a  twentieth  for  a  reserve,  the  share  of  the  new  com- 
pany in  the  revenues  of  the  railroad  will  not  exceed  what  will  be  paid  to  the 
liquidation;  that  it  will  be  the  less  to  be  feared  that  the  company  will  renounce  for 
such  a  small  remuneration  the  accomplishment  of  the  canal,  with  the  purpose  of  con- 
fining itself  to  the  operation  of  the  Panama  Railroad;  because  the  works  and  annui- 
ties paid  to  the  Colombian  Government,  added  to  the  indemnity  of  20,000,000  will 
have,  at  that  moment,  absorbed  the  totality  of  its  cash  capital  in  such  a  fashion  that 
the  company  will  have  found  that  it  has  bought  at  nearly  80,000,000  the  one-half 
of  the  revenues  of  the  railroad;  that  the  apprehensions  manifested  by  Couaillier  are 
then  without  foundation;  that  the  rights  as  to  the  Panama  Railroad  have,  it  is  true, 
been  bought  by  the  Panama  company  for  93,000,000  francs,  but  it  is  shown  that  the 
price  was  very  considerably  raised  by  speculation,  as  also  that  the  revenues  of  the 
railroad  were  artificially  increased; 

That,  if  it  is  legitimate  to  expect  in  the  future  a  remunerative  revenue,  it  has  none 
the  less  been  demonstrated  that  the  sale  en  bloc  for  20,000,000  francs  of  the  half 
of  that  revenue  constitutes  a  transaction  altogether  to  the  advantage  of  the  liquida- 
tion. 

As  you  see,  the  tribunal  has  done  justice  both  to  the  argument  drawn 
from  the  purchase  price  of  93,000,000  francs  by  the  old  company,  and 
all  the  other  pretexts  invoked  by  the  opposants  to  make  out  that  the 
liquidator  has  not  required  enough. 

But  your  commissaires  and  your  general  meeting  stand  at  a  point  of 
view  absolutely  opposite,  and  it  is  our  business  to-day  to  examine,  on 
the  other  hand,  w  hether  the  requirements  of  the  liquidator  have  re- 
mained within  reasonable  limits. 

It  would  not  be  so  if,  as  the  tribunal  states,  your  company  was  ex- 
posed to  the  purchase,  at  nearly  80,000,000,  of  the  half  of  the  reve- 
nues of  the  railroad. 

That  sum  can  not  be  reached  in  any  case,  since  your  cash  capital  is 
60,000,000. 


PANAMA  CANAL  TITLE. 


257 


On  the  other  hand,  one  should  not  consider,  as  making  part  of  the 
price  of  purchase  of  the  rights  to  the  railroad,  the  sums  which  your 
company  proposes  to  expend  to  accomplish  the  construction  of  the 
canal.  That  is  an  enterprise  the  extent  of  which  you  should  not  de- 
ceive yourselves  about. 

The  loss  which  you  may  incur  should  not  enter  into  account  after 
to-day  in  calculating  the  compensation  representing  a  special  part  of 
the  contribution  of  the  liquidator. 

What  is  true  is  that  your  company,  in  paying  to  the  Liquidator  an 
indemnity  of  20,000,000,  while  it  will  receive  the  one-half  of  the  profits, 
is  proceeding  in  reality  on  the  footing  of  40,000,000  for  the  railroad. 

This  should  be  the  basis  of  our  reasonings.  After  what  we  have 
stated  above  on  the  subject  of  the  money  value  and  the  present  con- 
dition of  the  railroad,  the  facts  can  not  be  dissembled  that  the  ulti- 
mate conditions  here  are  a  little  severe. 

But  the  matter  ought  not  to  be  looked  upon  as  a  cession  pure  and 
simple  at  a  price  debated  and  agreed  upon.  It  is  diminished  by  other 
considerations  which  we  have  already  brief!}7  indicated  and  shall  develop. 

Properly  speaking,  there  is  not  a  question  of  a  price,  but  of  an 
indemnity.    The  by-laws  say  that  expressly. 

This  indemnity  was  stipulated  by  the  liquidator  for  the  case  in  which 
your  company  will  not  construct  the  canal.  It  has  altogether  the  char- 
acter of  a  penal  clause,  and  it  appears  legitimate  that  the  figure  should 
be  very  high.  Indeed,  the  stopping  of  your  enterprise  would  expose 
the  greater  part  of  the  assets  which  the  liquidator  has  contributed  to 
you  to  grave  consequences. 

The  rights  as  to  the  Panama  Railroad  preserving  on  every  hypothe- 
sis their  value,  it  is  proper  that  the  liquidator  has  consented  to  trans- 
fer them  to  you  on\y  upon  assuring  an  indemnity  equal  to  the  maximum 
value  which  they  may  have. 

On  the  other  hand,  it  is  to  your  interest  to  consent  to  pay  ulti- 
mately this  indemnity,  for  the  purpose  of  obtaining  the  certainty  of 
preserving  by  definitive  and  irrevocable  ownership  the  rights  of  the 
railroad,  in  case  you  may  have  difficulty  as  to  the  construction  of  the 
canal.  We  shall  speak  here  only  with  a  certain  reserve  of  the  state 
of  affairs  to  which  we  have  already  made  allusion,  and  which  is  very 
well  known  to  all  persons  familiar  with  the  matter  of  Panama.  The 
railroad  is  an  important  factor  of  every  great  enterprise  to  be  carried 
on  upon  the  Isthmus.  The  ultimate  destinies  of  every  way  of  com- 
munication between  the  two  oceans  are  bound  up,  at  least  in  part, 
with  those  of  the  railroad.  You  will  assure  the  future,  whatever  may 
happen,  in  obtaining  as  to  the  Panama  Railroad  a  great  influence. 
You  will  thus  respond  to  the  original  idea  which  caused  the  formation 
of  your  company,  and  which  consists  in  making  all  possible  efforts  in 
order  that  an  enterprise  which  has  already  cost  so  much  of  French 
savings  should  not  attain  its  conclusion  except  with  their  concurrence. 

If  these  reasons  seem  to  you  well  founded  you  will  approve  the 
special  conditions  of  this  paragraph,  as  well  as  the  general  conditions 
of  the  contribution  of  M.  Gautron. 

VI. 

Article  52  attributes  to  the  benefit  of  the  council  of  administration 
5  per  cent  of  the  net  profits  of  the  company  before  the  division  among 


8751—02  17 


258 


PANAMA  CANAL  TITLE. 


the  shareholders  and  the  liquidator  of  the  ol<l  company.  It  is  equit- 
able  that  the  persons  who  will  carry  on  the  company  shall  have  an 
interest  in  the  results  which  it  is  to  produce. 

This  provision  is  customary,  and  the  amount  adopted  and  inserted 
in  your  by-laws  should  be  ratified  by  you. 

VII. 

In  conclusion,  gentlemen,  we  have  exhibited  to  you,  a  little  tedi- 
ousl}7,  perhaps,  all  the  points  to  which  the  commission  which  you  have 
given  us  makes  it  our  duty  to  call  to  your  attention.  We  should 
depart  from  our  role  if  we  should  discuss  in  this  report  the  future  of 
the  enterprise  to  which  you  have  given  your  support. 

The  past  imposes  upon  us  the  greatest  reserve.  But  we  can  say, 
what  our  profound  examination  has  confirmed  for  us,  that  is,  that 
your  company  is  created  under  conditions  of  prudence,  that  it  is  sur- 
rounded by  measures  of  inspection  and  control  which  we  think  will 
attract  confidence  and  will  permit  it  to  pursue  and  accomplish  the 
work  of  reconstruction  in  view  of  which  it  has  been  established. 

We  are  unanimously  of  opinion  that  the  provisions  contained  in 
the  b3^-laws,  and  which  establish  on  behalf  of  the  Colombian  Gov- 
ernment, of  the  liquidation,  and  of  the  future  administrators  particular 
advantages,  ought  to  be  approved  by  you. 

Paris,  October  8,  1894. 

The  three  verifying  commissioners: 

Ed.  Fougeu. 
Ch.  Goudchaux. 
G.  Focke. 


Panama  Railroad  Company.    Balance  sheet  December  31,  1893. 


Assets. 


Cost  of  the  road  

Property  on  the  Isthmus  

Materiel  

Profits  not  yet  received  (estimate 

in  part)  

Accounts  to  be  received  

Sinking  fund  

Cash  on  hand  in  New  York  

Cash  on  hand  in  London  

Cash  on  hand  at  the  agency  on  the 

Isthmus  '  

Due  by  agency  on  the  Isthmus  

General  European  agents  

Interest  upon  funds  on  deposit . . . 
Advance  of  indebtedness  to  the 

Republic  of  Colombia  

Bonds  sterling,  7  per  cent  on  the 

t  reasury  of  the  general  mortgage 

indebtedness  

Due  by  sinking  fund  

Advances  to  the  company  of  the 

steamers  of  the  Panama  Railroad 


Surplus 


Dollars. 


10, 215,320.  73 
26:?,  (116.74 
169, 322. 99 

80, 967. 67 
18, 648. 14 
1,436, 189.22 
177,051.32 
22,888. 24 

30,204.73 
4,855. 81 
2, 094. 35 
1,306.94 

2, 152, 000. 00 


471,000.00 
17,284. 12 


115, 131.  38 


15, 177, 882.  38 


1,  793,  350. 42 


Debts. 


Capital  stock  

Bonds,  7  per  cent  general  mort- 
gage debt  

Bonds  of  indebtedness  to  Colom- 
bia, 6  per  cent  

Funds  to  buy  bonds  

Interest  accumulated  on  those 
bonds   

Debts  on  the  Isthmus  not  pre- 
sented  

Coupons  due  

Dividends  not  claimed  

Due  for  employees  who  have  died 
or  left  

Due  to  the  Government  of  Panama 

Due  to  the  annexed  companies  . . 

Accounts  to  be  paid  

Divers  unpaid  accounts  

Surplus  December  31,  1892   

Addition  to  surplus  for  the  year 


PANAMA   CANAL  TITLE. 


259 


EXHIBIT  N. 

FIRST  AND  LAST  REPORTS  (1895,  1901)  OF  THE  COUNCIL  OF  ADMINIS- 
TRATION OF  THE  NEW  PANAMA  CANAL  COMPANY. 

REPORT  OF  THE   COUNCIL   OF  ADMINISTRATION   TO  THE  ORDINARY 
GENERAL  ASSEMBLY   JF  DECEMBER  21,  1895. 

Gentlemen:  You  arc  met  in  ordinary  general  assembly  to  receive 
an  explanation  of  the  operations  of  the  company  during  its  first  activ- 
ity, the  duration  of  which  has  been  eight  months  and  ten  days,  since 
the  21st  of  October,  1894,  the  date  of  its  definitive  constitution,  and  up 
to  the  30th  of  June,  1895.  You  will  have  to  pass  upon  the  accounts 
involved  in  such  operations  and  upon  the  proposition  which  we  shall 
have  the  honor  to  submit  to  you. 

1. 

It  is  proper  to  go  over,  in  the  beginning,  the  particular  circum- 
stances in  which  our  company  was  formed. 

By  the  terms  of  article  1  of  the  contract  of  prorogation  of  April  5, 
1893,  the  termination  of  the  Panama  Canal  concession  was  to  ensue  if 
a  new  company  for  its  construction  should  not  be  formed  before  Octo- 
ber 31,  1894,  and  "if  the  work  of  excavation  was  not  undertaken  in 
a  serious  and  permanent  manner  before  that  date." 

It  is  not  without  difficulty  that  the  promoters  of  the  new  company 
have  been  able  to  attain  their  object  within  the  necessary  time.  The 
subscription  of  the  greater  part  of  the  capital  resulted  from  proceed- 
ings whose  validity  was  submitted  to  judicial  sanction  and  legal  delay. 
Thanks  to  the  care  and  activity  of  the  judicial  officers,  no  unfavorable 
incident  has  occurred,  and  3Tour  company  was  able  to  validly  constitute 
itself  on  the  21st  of  October,  1894,  ten  days  before  the  expiration  of 
the  period  referred  to. 

The  uncertainty  which  existed  up  to  the  last  moment,  gentlemen, 
forbade  either  the  contracting  of  any  engagement  in  the  name  of  the 
company  in  process  of  formation,  or  to  take  the  steps  which  are  ordi- 
narily taken  to  assure  from  its  commencement  the  operations  of  the 
future  company.  It  was  therefore  necessary  the  day  after  its  consti 
tution  to  improvise  all  the  elements  of  an  organization,  which  it  was 
impossible  to  prepare  in  advance,  even  as  to  matters  the  most  indis- 
pensable. 

But,  thanks  to  the  foresight  of  the  promoters  and  the  concurrence 
of  the  liquidator  of  the  Universal  Company,  we  have  been  able  rapidly 
and  with  success  to  safeguard  your  interests  in  Colombia. 

From  the  22d  of  October  the  council  of  administration,  by  cable- 
gram, accredited  as  its  representative  near  the  Colombian  Government 
M.  Mancini,  formerly  charge  d'affaires  of  the  French  Republic,  who 
already  exercised  the  same  function  for  the  liquidation  of  the  old  com- 
pany. It  charged  him  to  officially  notify  the  Government  of  Bogota 
of  the  formation  of  the  new  company  and  to  present  the  documents 
previously  sent  to  our  agent.  At  the  same  time  the  minister  of  for- 
eign affairs  of  the  French  Republic  was  good  enough,  upon  our  appli- 
cation, to  instruct  the  minister  of  France  at  Bogota  to  make  the  same 
communication. 


260 


PANAMA   CANAL  TITLE. 


The  23d  and  31st  of  October  M.  Marco  F.  Suarez,  minister  of  for- 
eign affairs  for  the  Republic  of  Colombia,  answered  these  notifications 
by  dispatches,  recognizing  without  reservation  the  constitution  in  due 
time  of  our  company.  These  dispatches  were  inserted  in  the  "Oficial 
Journal"  of  Bogota,  together  with  the  complete  text  of  our  by-laws. 
On  his  part,  M.  Mallarino,  minister  of  Colombia  at  Paris,  gave  us  the 
most  satisfactory  assurances  of  the  disposition  of  his  Government. 

The  second  condition  imposed  by  the  contract  of  prorogation— that 
is  to  say,  the  "taking  up  of  the  work  of  excavation  in  a  serious  and 
permanent  manner" — has  likewise  been  fulfilled  in  due  time.  A  cable- 
gram, announced  in  advance  by  instructions  of  the  Liquidator  to  the 
director  of  his  business  on  the  Isthmus,  has  permitted  to  he  prepared 
the  reopening  of  the  workshops  and  their  being  put  into  activity  at 
the  desired  moment  with  a  sufficient  number  of  workmen. 

The  new  company  thus  found  itself  in  perfect  conformity  with  the 
clauses  of  the  documents  of  prorogation,  and  a  new  period  of  ten 
years  for  the  execution  of  the  canal  commenced  to  run  on  the  22d  of 
October,  1894. 

We  think  well  to  add  that  we  have  had  but  to  acquiesce  under  all 
circumstances  as  to  our  relations  with  the  Colombian  Government. 
The  questions  which  the  installation  and  carrying  on  of  our  operations 
on  the  Isthmus  have  given  rise  to.  have  been  settled  in  a  spirit  of  lofty 
equity,  and  to  our  satisfaction.  We  confidently  expect  to  find  always 
the  same  justice  and  the  same  good  will  from  the  Colombian  Govern- 
ment which  marks  the  close  of  the  difficulties  of  the  task  we  have 
undertaken,  and  will  certainly  aid  us  to  surmount  them  in  the  interest 
of  the  future  of  Colombia,  and  to  develop  the  commerce  of  the  world. 

II. 

One  of  the  constitutive  elements  of  the  contribution  made  by  the 
liquidator  of  the  old  compan\T  of  the  interoceanic  canal  to  our  com- 
pany was  represented  by  68,534  shares  of  4 *  Panama  Railroad."  which 
have  been  transmitted  to  us  with  the  reservations  and  conditions 
embodied  on  that  subject  in  our  by-laws. 

The  situation  of  this  matter,  general^  little  understood,  was  far 
from  being  satisfactory  when  our  compan}T  was  formed.  We  think  that 
to  give  you  the  data  to  understand  it  properly  it  will  not  be  useless  to 
go  over  here  the  general  points  of  its  constitution  and  the  principal 
phases  of  its  development. 

We  do  not  need  to  return  to  the  principal  considerations  which  have 
been  the  motive  for  the  contribution  of  these  shares  to  our  company. 
They  have  been  communicated  in  the  report  of  the  commissaires  to 
3Tour  second  general  constitutive  meeting,  which  explains  the  natural 
corelations  existing  between  the  two  enterprises. 

Created  in  1849,  under  the  form  of  an  anonymous  company,  by  virtue 
of  a  charter  delivered  Iry  the  State  of  New  York  for  the  purpose  of 
favoring  and  facilitating  the  commerce  of  the  United  States  at  a  time 
when  there  existed  no  railroad  connecting  the  coasts  of  the  Atlantic 
and  Pacific,  "the  Panama  Railroad  Company"  had  for  its  object  the 
operation  of  a  railroad  of  76  kilometers,  which  has  opened  to  inter- 
national commerce  the  Panama  route. 

The  concession  granted  to  the  compan}T  in  the  beginning  by  the 
Republic  of  New  Granada  was  confirmed  later  by  the  Colombian  Gov- 


PANAMA    (ANAL  TITLE. 


eminent.  By  the  terms  of  its  by-laws  it  is  administered  by  a  council 
whieh  sit>  in  New  York.  It  finds  itself,  by  virtue  of  its  constitution 
and  treaties,  placed,  as  does  the  way  across  the  Isthmus,  under  the 
rule  and  protection  of  the  laws  of  the  United  States. 

Outside  of  its  stock  capital,  which  i-  *7.  .000  divided  into  7<».o0<i 

>harcs  of  $100  each,  "the  Panama  Railroad  Company"  has  issued  two 
sets  of  bonds,  the  interest  on  which  has  required  for  the  last  year  the 
sum  of  £8<j!L< ><>(».  the  bonds  in  circulation,  representing  on  the  31st  of 
December.  181*4,  a  capital  of  K4.5t>9,0(M>.  after  deducting  bonds  paid, 
bought  in.  or  remaining  in  the  hands  of  the  company. 

One  of  these  bond  issues,  which  is  at  7  per  cent  interest,  and  which 
has  not  been  paid,  is  protected  by  a  general  mortgage  on  the  immova- 
ble property  of  the  company.  Sufficient  provision  has  not  been  made 
to  assure  the  reimbursement  which  falls  due  for  the  whole  on  the  10th 
of  October,  1S97. 

The  other  issue  is  at  6  per  cent,  redeemable  in  twenty-eight  years, 
from  1881  to  1908,  by  annual  payments  which  the  operation  of  the  road 
provides  for  with  regularity.  The  carrying  on  of  the  railroad  from 
Colon  to  Panama,  commenced  in  1855.  has  produced,  from  the  begin- 
ning, brilliant  results,  and  the  period  elapsing  up  to  1m>!»  was  very 
prosperous. 

The  opening  of  the  first  transcontinental  lines  modified  these  gen- 
eral conditions  of  traffic  by  the  Isthmus.  It  has  resulted  in  greatly 
reducing  the  rate  of  transport  by  the  Panama  Railroad,  and  to  impel 
that  company  to  seek  the  alliance  and  concurrence  of  companies  oper- 
ating vessels  on  the  Atlantic  as  well  as  on  the  Pacific. 

It  was  thus  that  in  1ST2,  1875.  and  1878  arrangements  took  place 
between  the  Panama  Railroad  and  the  Pacific  Mail  Steamship  Com- 
pany, with  the  effect  of  regulating  the  conditions  of  traffic  by  the 
Isthmus.  To  understand  from  the  point  of  view  of  transportation,  the 
results  of  the  regime  inaugurated  in  187:2  in  the  operation  of  that  rail- 
road, it  is  proper  to  omit  the  period  from  1881  to  ls8(.*,  which  was 
favored  by  the  exceptional  amount  of  travelers  and  merchandises  dur- 
ing the  works  of  the  old  company  of  the  Interoceanic  Canal.  It 
appears  that,  omitting  that  abnormal  element,  the  traffic  of  the  rail- 
road doubled  during  the  period  of  twenty  years  which  followed  1*7:2. 
without  the  annual  amount  of  receipts  of  transportation  having  been 
perceptibly  increased. 

We  shall  give  to  the  carrying  on  of  the  railroad  its  true  character 
by  relating  here  that  during  that  period  of  twenty  years  the  expenses 
of  operation  following  the  development  of  traffic,  increased  dispropor- 
tionately. The  consequence  was  the  obvious  diminution  of  the  profits 
of  carrying  on  the  road  from  the  commencement  to  the  end  of  that 
period. 

In  the  first  months  of  1893  the  last  agreement  concluded  with  the 
Pacific  Mail  ended  without  its  having  been  possible  to  renew  it  before 
its  expiration,  upon  acceptable  conditions.  The  Pacific  Mail  then 
ceased  carrying  on  the  maritime  part  of  the  business  upon  a  common 
tariff  of  rates.  More  than  that,  it  claimed  that  the  agreement  of  1872 
allowed  it  certain  privileges  without  reciprocity  as  to  traffic  between 
Panama  and  Acapulco.  and  it  introduced  upon  that  subject  a  proceed- 
ing before  the  tribunal  of  New  York.  The  rupture  of  relations  with 
the  ship  company,  whieh  had  assured  up  to  that  time  the  regular 
service  of  the  route  by  the  Isthmus  between  the  coasts  of  the  United 


262 


PANAMA  CANAL  TITLE. 


States  on  the  Atlantic  and  the  Pacific,  imposed  upon  the  Panama  Rail- 
road Company  the  obligation  to  maintain  a  line  of  vessels  on  each  of 
the  two  oceans  from  New  York  to  Colon  and  from  Panama  to  San 
Francisco. 

The  carrying  on  of  the  two  lines  by  sea  in  connection  with  the  rail- 
road has  been  maintained  with  a  loss.  However,  the  organization  of 
these  maritime  services  has  permitted  the  company  to  preserve  prac- 
tically the  amount  of  traffic  of  the  railroad  before  the  reductions  of 
rates  which  it  has  been  compelled  to  make,  produced  an  important 
diminution  in  its  receipts. 

In  conclusion,  the  last  two  periods  of  operation  of  1893  and  1894 
have  been  much  the  most  unfavorable  since  the  beginning.  The  car- 
rying on  of  the  railroad  during  those  two  periods  has  left,  according 
to  the  accounts  of  the  company,  an  excess  of  receipts  of  £*29K,s,S;">, 
after  payment  of  all  its  expenses,  including  interest  on  the  bonds. 
But  this  excess  of  receipts  has  been  employed  wholly  to  cover  the 
losses  arising  from  the  two  lines  of  vessels,  the  amount  of  which  has 
risen  to  a  total  practically  equal  to  that. 

The  negotiations  undertaken  and  broken  oft'  at  different  times  during 
three  years  with  the  Pacific  Mail  ( Jompany  have  continued  during  L895. 
They  have  been  conducted  by  the  council  of  administration  of  the 
Panama  Railroad  with  a  persevering  ability  to  which  we  are  glad  to 
render  homage.  A  telegram,  dated  the  16th  of  the  present  month, 
has  informed  us  that  these  laborious  negotiations  are  about  to  result  in 
the  signing  of  an  agreement.  This  happy  solution,  which  will  carry 
with  it  the  suppression  of  the  maritime  service  which  the  company  has 
organized  on  the  Pacific,  will  improve  the  general  results  of  its  opera- 
tion. 

In  the  course  of  those  negotiations  the  operations  of  1895  have  pro- 
ceeded under  always  difficult  conditions.  However,  thanks  to  an  abun- 
dant crop  of  coffee  in  Central  America  and  to  other  favorable  circum- 
stances, the  movement  of  the  receipts  of  the  traffic  of  the  railroad  for 
the  three  first  quarters  of  the  current  year  is  sensibly  increased,  com- 
pared with  the  corresponding  figures  of  the  preceding  year.  On  the 
other  hand,  the  measures  taken  by  the  council  of  administration  of  the 
Panama  Railroad  with  a  view  to  diminishing  expenses  have  alread}7 
produced  salutary  results. 

It  is  not  permitted  to  us  to  state  the  ultimate  result  of  the  operations 
of  the  current  yeai .  the  accounts  of  which  can  not  be  communicated  to 
us  before  next  March.  There  is,  however,  reason  to  think  that,  not- 
withstanding the  sacrifices  required  b}T  the  maintenance  of  the  two 
lines  of  vessels,  the  results  of  the  operation  of  the  railroad  in  1895  will 
be  more  satisfactory  than  those  of  the  operations  of  the  two  previous 
years. 

But  in  the  meantime  the  Panama  Railroad  Company  is  required  to 
reserve  all  its  financial  ability  and  put  itself  in  a  condition  to  meet  the 
falling  due  of  bonds  in  1897.  It  can  not  think  then  of  executing  with 
its  own  resources,  nor  by  an  appeal  for  a  loan,  the  work  required  on 
the  Pacific  for  an  improved  port.  As  has  been  said  to  you  by  the 
commissaire  having  to  do  with  the  contributions,  the  enterprise  of  the 
construction  of  the  canal  can  not  be  indifferent  to  the  proper  carrying 
on  of  the  railroad  company.  More  than  that,  our  constant  care  is  to 
attract  the  commercial  currents  to  the  Panama  route  in  order  to  assure 
for  the  canal,  from  its  opening  to  navigation,  an  immediate  traffic. 


PANAMA   CAN  A  L  TITLE. 


We  consider  it  then  indispensable  to  lend  our  aid  to  the  Panama  Rail- 
road to  remedy  the  grave  detects  of  the  railroad,  even  if  Tor  that  it  is 
necessary  to  make  an  advance  of  funds  to  a  limited  extent. 

In  the  present  state  of  affairs  the  lack  of  constructions  renders  the 
port  of  Panama  altogether  insufficient.  The  shallowness  of  the  water 
prevents  reaching  the  wharves  of  the  Panama  Railroad.  Ships  are 
obliged  to  cast  anchor  several  kilometers  from  shore,  under  the  pro- 
tection of  the  Naos  Islands,  and  the  cargoes,  on  arriving  or  departing, 
are  Laden,  unladen,  and  transported  on  lighter.  These  operations  are 
tedious,  costly,  and  seldom  sure.  There  result  losses  of  time  to  the 
vessels,  risks  of  loss  of  the  merchandise,  and  finally  a  double  handling, 
which  adds  to  the  charge  of  transportation  by  way  of  the  Isthmus. 
The  council  of  administration  of  the  Panama  Railroad  Company  is 
probably  occupied  in  trying  to  remedy  these  conditions,  so  unfavor- 
able from  the  point  of  view  of  the  development  of  traffic.  To  that 
end  it  has  proceeded  to  examinations  having  in  view  the  creation  of  a 
port  at  La  Boca,  at  the  point  where  the  canal  opens  on  the  Pacific  and 
which  is  already  connected  with  Parama  by  a  branch  railroad  estab- 
lished by  the  Old  Panama  Canal  Company.  The  execution  of  this 
project  will  permit  ships  to  discharge  themselves  directly  opposite  the 
railroad. 

The  expenses  for  this  purpose  is  calculated  at  about  5,000.000  francs. 

The  examination  of  the  ways  and  means  to  be  employed  for  assur- 
ing the  execution  of  that  project  has  led  the  Panama  Railroad  to  ask 
us  to  lend  it,  in  some  manner  to  be  determined,  the  sum  of  5,000,000 
francs,  representing  the  amount  of  the  aforesaid  expenses.  We  con- 
sider that  it  is  in  conformity  with  your  interest  to  make  the  advance 
in  question  on  certain  conditions,  and  if  possible  with  special  guaran- 
tees. Consequently  we  shall  ask  you  to  give  by  particular  resolution 
the  authorization  necessary  for  that  purpose. 

III. 

We  take  up  now,  gentlemen,  the  principal  object  of  your  company, 
which  is  the  construction  of  the  Panama  Canal. 

We  are  going  to  set  before  you  as  completely  as  is  possible  to  us 
the  progress  of  our  examinations,  and  of  our  operations  on  the  Isth- 
mus, the  results  obtained  up  to  June  30,  and  the  hopes  they  permit  us 
to  conceive  of  the  future  of  the  enterprise. 

We  have  taken  possession  of  a  domain  of  14,000  to  15,000  hectares, 
that  is: 

(1)  A  strip  of  200  meters  wide  on  each  side  of  the  canal,  granted 
from  the  public  lands  by  the  law  of  concession  of  the  18th  of  May, 
1878; 

(2)  Lands  of  Christopher  Columbus,  conquered  from  the  sea  by 
different  private  owners,  acquired  by  the  old  company,  and  of  which  a 
large  part  has  the  character  of  private  ownership  and  can  be  disposed  of. 

Since  the  cessation  of  the  works  numerous  occupants  have  estab- 
lished themselves  on  these  lands  and  have  cleared  a  part.  By  the 
terms  of  article  3  of  the  contract  of  prorogation  of  December  26, 1890, 
the  Colombian  Government  has  obliged  itself  to  lend  its  active  aid  to 
put  an  end  to  these  usurpations.  Our  agents  have  given  all  their 
energy  io  the  accomplishment  of  this  difficult  task,  endeavoring  to 
avoid,  as  far  as  possible,  litigation. 


PANAMA   CANAL  TITLE. 


On  the  30th  of  June  800  affairs  of  this  kind  were  already  settled. 
This  work  proceeds  in  a  satisfactory  manner. 

IV. 

The  immovable  constructed  properties  existing  on  the  Isthmus  are 
very  numerous.  They  consist  of  buildings  for  bureaus,  workshops 
and  storehouses,  hospitals,  dwelling  houses  for  the  agents,  barracks 
and  camps  for  the  workmen,  together  with  quite  a  large  number  of  con- 
structions not  devoted  to  the  business  of  the  enterprise,  susceptible  <>f 
being  rented  and  constituting,  as  does  a  portion  of  the  lands,  a  private 
and  dispensable  property. 

The  condition  of  preservation  of  these  different  constructions  varies. 
It  nevertheless  can  be  considered  as  certain  that  at  nearly  all  points 
along  the  canal  the  construction  is  in  a  good  state  of  preservation,  sus- 
ceptible of  being  repaired  at  little  expense,  and  sufficiently  ample  to 
accommodate  the  personnel,  administrative  and  technical,  as  well  as 
the  workmen,  even  in  the  periods  of  most  activity  of  the  works.  The 
making  of  new  constructions  will  be  necessary  only  at  a  small  number 
of  places  where  the  works  not  provided  for  by  the  old  company  may 
require  them. 

The  distribution  of  drinkable  water,  of  the  greatest  importance  from 
a  hygienic  point  of  view,  proceeds  wherever  it  is  necessary.  It  will 
be  easy  to  provide,  when  necessary,  for  any  new  requirements  in  that 
respect. 

The  houses  not  used  in  connection  with  the  works,  especially  at 
Colon,  are  rented,  and  produce  a  revenue  w  hich  diminishes  our  expenses 
of  caring  for  our  property,  and  are,  besides,  moderate. 

V. 

We  have  also  taken  possession  of  the  materiel  accumulated  on  the 
Isthmus  at  great  expense,  which  constitutes  an  inseparable  accessory 
of  the  concession.  The  liquidation  perfectly  understood  the  necessit}7 
of  preserving  this  portion  of  its  assets,  which,  while  without  realizable 
commercial  value,  must  facilitate  greatly  the  recommencement  of  the 
works.  It  took  care  to  collect  the  scattered  objects  at  the  workshops 
and  to  classify  them. 

Without  speaking  of  the  workshops  for  repair,  well  made  and  on 
an  extensive  plan,  the  following  table  will  give  you  an  idea  of  the 
materiel  of  the  working  apparatus: 


Marine  and  river  dredges    35 

Lighters  and  steam  launches   26 

Boats  with  valve  appliances   40 

Excavators  of  different  kinds   88 

Locomotives  of  gauge  of  1.52  meters   253 

Railway  cars  of  gauge  of  1.52  meters   6,  006 

Kilometers  of  track  of  gauge  1.52  meters   500 

Locomotives,  narrow  gauge   14 

Small  cars  (Decauville)   7,449 

Kilometers  of  road  (Decauville)   110 

Locomobiles   169 

Steam  and  hand  windlasses  -•   254 

Skiffs   44 

Derricks   278 

Flatboats   81 


PANAMA   CANAL  TITLE. 


265 


With  some  exceptions,  the  Dumber  of  these  machines  appears  to  be 
sufficient  for  the  construction  of  the  canal.  There  will  be,  then,  to  buy 
only  a  certain  number  of  machines  and  tools  which  the  old  company 
did  not  have  and  the  employment  of  which  will  produce  an  economy 
in  the  execution  of  the  works.  The  materiel  in  general  has  been  and 
continues  to  be  well  cared  for. 

VI. 

You  will  understand,  gentlemen,  that  we  would  not  have  undertaken 
the  difficult  task  w  hich  has  been  confided  to  us  if  we  had  not  been  pre- 
viously assured  by  the  opinion  of  a  very  honorable  engineer,  and  one 
of  unquestionable  ability,  that  the  accomplishment  of  the  canal  was 
not  beyond  the  strength  and  devotion  of  men  tirmly  resolved  to  under- 
take that  great  work. 

From  the  month  of  August,  1894,  the  promoters  of  the  new  under- 
taking had  applied  to  M.  de  la  Tournerie,  inspector-general,  who  had 
acquired,  as  president  of  the  general  council  of  roads  and  bridges,  an 
exceptional  experience  of  large  works. 

He  made  his  reply  after  a  profound  examination  of  the  business. 
After  a  complete  study  of  all  the  documents  of  which  he  could  possess 
himself,  he  is  convinced  that  the  accomplishment  of  the  canal  can  be 
effected  in  the  first  days  of  October,  1894,  and  he  accepted  in  princi- 
ple the  presidency  of  the  technical  committee  provided  by  article  31 
of  the  by-laws. 

Immediatel}7  after  the  constitution  of  your  company,  M.  de  la  Tour- 
nerie entered  upon  his  duties,  and  we  have  occupied  ourselves  in  form- 
ing a  personnel  of  engineers  and  constructors  to  send  to  the  Isthmus. 
The  memories  of  the  past  have  rendered  this  recruiting  difficult,  and 
time  was  necessary  to  prepare  instructions  and  establish  a  perfect 
understanding  with  the  engineers.  They  embarked  at  St.  Nazaire  on  the 
9th  of  December,  1894,  and  arrived  at  Colon  the  30th  of  the  same  month. 

Up  to  that  date  the  continuation  of  the  works  on  behalf  of  the  new 
company  had  been  assured  by  the  personnel  of  the  liquidation  of  the 
old  company. 

The  transfer  of  the  business  took  place  on  the  7th  of  Januaiy,  1895, 
without  an}r  difficulty,  and  conformably  to  instructions  arranged 
between  the  liquidator  and  our  company. 

The  president  of  the  technical  committee  wTent  to  the  Isthmus, 
accompanied  by  the  administrator  of  the  company,  in  order  to  settle  by 
personal  inspection  their  own  views  and  to  complete  the  instructions 
given  to  the  local  personnel. 

After  having  left  the  Isthmus,  and  in  order  to  make  use  of  all  means 
of  information,  these  gentlemen  made  a  visit  to  examine  the  canal  in 
course  of  construction  from  Chicago  to  the  Mississippi,  some  maritime 
canals  from  Amsterdam  to  the  sea,  from  the  Baltic  to  the  North  Sea, 
and  from  Liverpool  to  Manchester. 

The  preliminary  studies  and  experiments  which  we  have  mentioned 
have  permitted  the  president  of  the  technical  committee  to  map  out 
the  outlines  of  the  enterprise. 

VII. 

We  do  not  need  to  remind  you,  gentlemen,  that  the  construction  of 
a  canal  at  sea  level  seems  to  be  out  of  the  question.  The  experience, 
so  dearly  purchased,  has  demonstrated  that  such  a  work  would  entail 


266 


PANAMA   CANAL  TITLE. 


an  excessive  expense  and  require  a  considerable  lapse  of  time.  Every- 
one  appears  to  be  in  accord  at  present  in  this  respect. 

There  is  no  question,  then,  as  to  a  canal  with  lock-. 

This  being  so,  there  have  been  numerous  projects.  The  firs!  was 
prepared  by  the  old  company  at  the  time  when  it  was  compelled  to 
renounce  its  original  conception  of  a  sea-level  canal. 

Another  project  was  elaborated  by  the  commission  instituted  by  M. 
Brunet,  liquidator,  under  the  presidency  of  M.  Guillemain,  inspector- 
general  of  roads  and  bridges.  The  question  was  taken  up  again  by  a 
great  number  of  engineers,  who  have  submitted  useful  ideas  and  pro- 
posed ingenious  solutions  of  such  and  such  particular  problems.  We 
shall  owe  much  to  the  works  of  our  predecessors.  But  investigations 
were  necessary  to  determine  the  details,  and  have  required  long  and 
minute  studies  upon  the  site.  The  commission  presided  over  by 
M.  Guillemain  recognized  this  formally  so  far  as  it  concerned  it,  and 
we  can.  without  temerity,  we  think,  extend  this  declaration  to  the 
other  projects  whose  authors  have  not  been  able  to  consecrate  to  such 
difficult  studies  the  time  and  money  necessary. 

The  two  principal  difficulties  that  the  execution  of  the  canal  pre- 
sents are  the  cut  of  Culebra  and  the  management  of  the  waters  of  the 
Chagres.  To-day  the  majority  of  technical  men  consider  that  these 
difficulties  should  be  overcome  in  the  following  manner: 

The  valley  of  the  river  will  be  dammed  at  suitable  points  selected, 
in  order  to  restrain  the  waters  in  such  a  manner  as  to  form  one  or  sev- 
eral lakes.  As  a  result,  the  diggings  to  be  made  will  be  much  dimin- 
ished, since  on  a  great  part  of  the  course,  in  place  of  being  obliged  to 
cut  a  trench,  navigable  lakes  will  be  created.  These  lakes  will  consti- 
tute at  the  same  time  immense  reservoirs,  so  that  the  floods  of  the  Cha- 
gres will  be  received  without  danger  to  navigation  and  for  the  canal. 
The  Chagres  will  cease  in  this  way  to  be  a  menace,  but  will,  on  the 
contrary,  be  a  valuable  auxiliary.  Finally,  the  cuttings  will  be  nearly 
reduced  to  the  cut  of  Emperador  and  that  of  Culebra,  the  length  of 
which  will  be  again  diminished  as  a  result  of  the  rising  of  the  plain 
of  water  in  the  basin. 

Thence  will  result  the  necessity  of  changing  the  present  line  of  the 
Panama  Railroad  according  to  a  new  line  to  be  determined  according 
to  the  exigencies  of  the  inundations. 

On  the  other  hand,  the  examination  of  the  great  maritime  canals 
constructed  in  these  latter  times  and  the  conditions  of  carrying  them 
on  demonstrates  that  for  the  security  and  facility  of  navigation  it  is 
indispensable — 

To  open,  from  the  beginning,  the  basin  at  the  locks  into  two  water 
courses; 

To  construct  locks  with  two  basins,  one  of  them  having  dimensions 
sufficient  to  receive  the  great  ships,  the  types  of  which  have  singularly 
increased  in  these  latter  times. 

As  to  supplying  the  higher  water  course,  several  plans  have  been 
proposed.  The  question  has  not  }Tet  been  definitively  settled,  but  we 
think  we  should  say  to  you  that  it  seems  to  us  very  desirable  to  supply 
it  by  means  of  mechanical  appliances. 

VIII. 

As  you  see,  our  company  finds  itself  in  the  presence  of  new  prob- 
lems, important  to  be  settled.    In  perfect  accord  with  M.  de  la  Tour- 


PANAMA  CANAL  TITLE. 


267 


norio,  we  have  thought  it  was  not  necessary  to  live  in  uncertainty  or 
in  obscurity  as  to  the  different  solut  ions  possible.     It  is  for  this  reason 

thai  the  Isthmus  has  been  covered  by  a  vast  number  of  operations  on 
the  land  destined  to  furnish  all  the  information  necessary  to  examine 
with  full  knowledge  the  numerous  questions  which  have  to  he  settled. 

Under  these  conditions  only  can  take  place  the  deliberations  of  the 
technical  committee,  to  which  will  belong,  according  to  article  31  of 
our  by-laws,  the  elaboration  of  a  definitive  project. 

We  should  have  seriously  neglected  our  duty  if,  giving  way  to 
natural  impatience,  we  had  shortened  the  period  of  preparation  and 
of  study. 

The  want  of  success  of  the  efforts  of  our  predecessors  has  cast  upon 
the  works  doubts  which  can  not  be  dissipated  except  on  condition  of 
presenting  to  the  public  a  project  deliberately  conceived,  studied  with 
scrupulous  care,  kept  within  the  limits  of  moderate  expense,  and 
answering,  nevertheless,  the  requirements  of  traffic. 

Jt  would  be  an  error  to  believe  that  one  could  find  in  a  hasty  and 
precipitate  development  of  the  works  a  means  of  immediately  restor- 
ing confidence. 

The  period  of  execution  will  be  all  the  more  short,  the  progress  of 
the  works  all  the  more  exempt  from  hesitations,  and  all  false  steps  or 
expenses,  including  the  interest,  will  be  the  less,  the  more  the  studies 
shall  have  been  made  profound  and  complete. 

Outside  of  this  line  of  conduct,  rigorous  and  methodical,  it  would 
not  be  possible  to  assign  a  limit  to  the  expense. 

These  studies  have  been  conducted  with  diligence  and  with  the 
greatest  care  by  the  personnel  charged  with  them  on  the  Isthmus;  the 
data  and  the  results  which  they  have  brought  to  us  have  been  succes- 
sively put  into  practice.  They  are  at  present  very  much  advanced, 
and  this  essential  part  of  the  task  approaches  its  termination. 

IX. 

At  the  same  time  that  the  studies  were  pursued  without  intermission, 
we  have  taken  up  and  developed  with  all  the  activity  possible  the  works 
commenced  in  the  great  cut  of  the  passage  of  the  Cordillera,  which 
must  be  made,  whatever  project  may  be  definitively  adopted. 

But  before  attacking  vigorously  the  excavations  it  was  necessary  to 
make  solid  the  unsafe  masses  on  the  left  crest  of  the  cut;  otherwise 
grave  accidents  would  be  feared. 

In  the  second  place,  it  was  not  possible  to  develop  immediately  upon 
the  whole  length  of  the  cut  the  works  of  Emperador  and  Culebra, 
because  there  is  encountered  in  both  cases  special  difficulties  which  a 
study  of  the  whole  and  of  the  special  establishments  for  excavation 
can  alone  settle  surely  and  economically. 

To-day,  thanks  to  the  protective  works,  we  consider  the  danger  of 
landslides  avoided,  and  a  tentative  study,  taking  into  account  the  expe- 
rience acquired  and  the  matters  to  be  provided  for,  has  permitted  to 
be  arranged  a  mode  of  work  which  warrants  us  in  counting  upon  the 
rapid  and  sure  excavation  of  a  large  cubic  quantity. 

Finally,  it  was  essential,  under  pain  of  proceeding  infallibly  to  an 
irremediable  check  of  the  enterprise  on  account  of  the  great  cost,  to 
regulate  from  the  beginning  the  conduct  of  the  works  in  a  manner 
to  maintain  salaries  at  a  reasonable  rate. 


268 


PANAMA  CANAL  TITLE. 


We  have  embarked  successfully  during  some  weeks  all  the  workmen 
who  had  presented  themselves.  While  we  took  the  precaution  not  to 
create  needs  in  addition  to  those  of  the  employment  of  the  labor  obtain^ 
able  on  the  Isthmus,  we  had,  however,  in  the  month  of  April,  ;i  first 
embarrassment  in  that  respect.  We  recognized  that  our  price  paid 
was  it  little  low.  We  kept  it  very  low  in  the  beginning  for  the  pur- 
pose of  destroying  the  illusion  of  those  who  looked  for  a  return  of  the 
extravagance  of  the  past.  We  have,  accordingly,  consented  to  raise 
slightly  the  price  for  our  work.  In  the  month  of  August  a  new  mis- 
hap occurred.  The  company,  convinced  that  the  salaries  were  sufficient^ 
resisted,  and  the  workmen  returned  to  the  plants  on  the  same  condi- 
tions as  before.  These  tacts  demonstrated  that  it  would  have  been 
dangerous  to  give  to  the  workmen  at  the  start  a  too  active  impulse. 
The  price  of  day  labor  would  have  been  too  much  raised  and  the  total 
expense  seriously  increased. 

We  believe,  then,  that  we  acted  wisely  in  proceeding  at  the  begin- 
ning with  circumspection  and  not  in  developing  our  plans  except  a  lit- 
tle at  a  time  and  in  a  methodical  way,  without  endeavoring  to  make 
immediately  and  regardless  of  price  a  large  cubic  excavation. 

We  have  thus  reached  the  point  gradually  of  employing  2,000 
workers.  To  augment  this  number  we  have  undertaken  to  get  work- 
men from  certain  of  the  Antilles,  but  the  local  authorities  have  thrown 
obstacles  in  the  way  of  emigration.  This  incident  has  a  little  retarded 
our  recruiting  in  requiring  us  to  seek  elsewhere.  Four  hundred  new 
workmen  have  arrived  at  Colon.  Six  hundred  others  are  expected] 
and  the  effective  force  is  thus  raised  to  3,000  men. 

With  this  personnel  of  workmen  we  intend  to  vigorously  continue 
the  works  at  the  cut  of  Emperador  and  that  at  Culebra.  A  first  trench 
or  ditch,  the  lower  part  of  which  will  be  15  meters  wide,  will  be  car- 
ried down  to  4  meters  below  the  plane  of  water  in  the  water  course  at 
those  places.  It  belongs  to  the  technical  committee  to  determine  upon 
this  plane,  which  does  not  permit  us  as  yet  to  estimate4  exactly  the 
time  for  the  digging  of  the  ditch. 

This  ditch  will  differ  from  the  final  trench  only  by  its  less  width  and 
by  a  very  slight  difference  in  its  depth.  When  it  is  terminated,  the 
possibility  of  completing  the  canal,  one  of  the  difficulties  of  which  con- 
sisted in  crossing  the  Culebra,  will  no  longer  be  doubtful  to  anyone. 

X. 

The  sanitary  administration  has  been  the  object  of  our  constant  solici- 
tude. We  have  considered  that  nothing  should  cause  a  neglect  in  assur- 
ing to  the  personnel  the  best  hygienic  conditions  possible  and  the  care 
necessary  in  case  of  accident  or  sickness. 

The  sanitary  condition  has  this  year  been  very  satisfactory;  the 
number  of  sick  has  remained  below  all  expectations.  Of  the  two  hos- 
pitals possessed  by  the  company  we  have  been  able  to  close  that  at 
Colon,  and  we  have  kept  that  of  Panama,  which  is  more  than  sufficient 
at  present  for  the  needs  of  the  service. 

During  the  month  of  June,  which  is,  from  a  sanitary  point  of  view, 
one  of  the  worst  of  the  }rear,  the  number  of  sick  in  the  hospital  did 
not  reach  2  per  cent  of  our  effective  force. 

It  seems,  besides,  that  the  salubrity  of  the  country  has  considerably 
increased  during  some  }Tears.    It  is  possible  that  this  improvement  is 


PANAMA  CANAL  TITLE. 


269 


due  to  the  clearing  and  cultivation  which  have  taken  place  since  the 
cessation  of  the  works  of  the  old  company. 

XL 

In  the  course  of  the  explanation  which  we  have  given  you  as  to  the 
plants  and  the  works  Ave  have  sufficiently  manifested  our  opinion  as 
to  the  important  role  which  belongs  to  the  technical  committee.  Such 
is,  we  think,  the  true  interpretation  of  article  31  of  the  by-laws. 
Also,  we  have  not  ceased  to  occupy  ourselves  in  the  formation  of  that 
committee. 

We  have  thought  that,  to  facilitate,  when  the  time  should  come,  the 
appeal  which  we  will  have  to  address  to  French  and  foreign  capital, 
this  committee  ought  to  have  an  international  character,  and  the 
French  members  should  be  selected  in  a  broad-minded  way:  that  is  to 
say,  at  the  same  time  among  the  engineers  of  state  and  among  the 
civil  engineers. 

The  deference  due  to  the  Government  has  induced  us  to  solicit, 
before  everything  else,  authorization  to  apply  to  the  engineers  of  roads 
and  bridges  in  active  service. 

Our  request  was  made  in  July  last.  We  have  since  then  repeated 
it  several  times,  but  by  dispatch  dated  the  29th  of  November  last  the 
minister  of  public  works  informs  us  that  he  regrets  not  being  able  to 
give  us  that  authorization. 

We  have  since  commenced  to  take  steps,  from  which  we  thought  it 
our  duty  to  abstain  up  to  this  time,  in  connection  with  some  eminent 
personages,  French  and  foreign,  and  we  expect  that  the  technical 
committee  will  be  shortly  constituted. 

XII. 

We  have  now,  gentlemen,  to  state  summarily  recent  incidents  to 
which  the  project  of  the  Nicaragua  Canal  has  given  rise. 

As  you  know,  an  interoeeanic  communication  by  Nicaragua  has 
been  under  examination  for  a  long  time,  and  even  during  the  period 
in  which  the  work  of  the  old  Universal  Company  was  in  the  greatest 
activity,  divers  attempts  were  made  without  success,  to  recommend 
that  enterprise  to  the  public  authorities  of  the  United  States. 

A  new  effort  is  being  made  with  the  same  end  in  view. 

In  the  month  of  January,  1895,  the  Senate  of  the  United  States  voted 
a  bill  tending  to  constitute  a  company  which  would  enjoy  a  guaranty 
or  interest  given  by  the  Federal  Government  and  would  be  placed 
under  its  control. 

This  bill  was  not  accepted  by  the  Chamber  of  Representatives,  which, 
however,  voted  at  the  end  of  its  session  a  creclit  of  &20,000  for  an 
examination  of  the  project  b}^  an  official  commission. 

The  report  of  the  commission  has  been  made.  We  do  not  possess 
its  text,  but,  according  to  analyses  published  in  American  papers,  it 
will  recommend  the  postponement  of  the  matter.  The  opinion  of  the 
commissioners  will  be  that  the  probable  expense  would  rise  to  about 
double  the  figure  contemplated  by  the  promoters  of  the  affair,  and  in 
view  of  the  gravity  of  the  difficulties  to  be  overcome  it  will  be  neces- 
sary to  proceed  to  new  investigations,  which  would  require  at  least 


270 


PANAMA   (  ANAL  TITLE. 


eighteen  months  and  entail  an  expense  of  (350,000,  or  nearl  y  1,800,000 
francs. 

It  is  not  for  us  to  predetermine  the  decision  which  will  be  taken  on 
the  subject  of  this  affair  I >y  the  United  States.  We  have  confidence 
that  that  great  nation  will  understand  that  the  universal  character  of 
the  work  of  Panama  can  not  fail  to  give  all  security  to  the  commer- 
cial and  political  interests  of  the  American  people,  the  sympathies  of 
whom  we  make  it  our  business  to  cultivate,  as  we  do  those  of  all  the 
maritime  nations. 

XIII. 

We  have  uothing  to  add  to  the  detailed  explanations  given  you  by 
the  commissaires  of  accounts  on  the  balance1  sheet  of  June  30,  L895, 
printed  at  the  end  of  the  present  report. 

We  may  mention  that  the  commission  of  examination,  instituted  by 
the  liquidator  of  the  Universal  Company,  in  accordance  with  the  pro- 
visions of  article  5  of  the  by-laws,  has  proceeded  to  have  its  creden- 
tials verified.  We  have  gladly  placed  ourselves  at  its  disposition  to 
facilitate  the  accomplishment  of  its  mission. 

XIV. 

By  the  terms  of  article  22  of  the  by-laws,  the  council  of  administra- 
tion renews  itself  to  the  extent  of  one-third  every  two  years,  when  its 
members  are  of  the  number  of  9,  12,  or  15:  and  in  case  the  number 
of  administrators  in  activity  is  not  exactly  divisible  by  it  belongs 
to  the  general  assembly  to  arrange  the  matter. 

Your  council  is  at  present  composed  of  ten  administrators.  We 
propose  to  you  to  decide  that  four  of  them  instead  of  three  shall  be 
selected  by  lot  before  your  next  annual  meeting,  which  will  have  to 
vote  as  to  their  being  replaced  or  their  reelection. 

XV. 

It  has  appeared  to  us  natural  and  desirable  that  the  bondholders  of 
the  old  company,  interested  like  you  in  the  accomplishment  of  the 
canal,  should  be  represented  in  your  council  of  administration,  and 
the  constitutive  meeting  of  the  20th  of  October,  1891:,  has  taken  action 
inviting  us  to  submit  a  proposition  to  that  end. 

•  We  have  particularly  considered  that  point,  but  we  have  speedily 
recognized  the  difficulty  of  proposing  to  your  choice  such  and  such  an 
individual  selected  among  the  old  company  bondholders,  Avithout  raising 
delicate  personal  questions. 

It  is  for  the  bondholders  themselves  to  agree  upon  the  designation 
of  their  candidates;  but  the  number  of  persons  interested  in  the  old 
company  is  too  great  for  that  to  be  possible,  and  the  candidates  pre- 
sented by  a  group  would  never  be  more  than  those  of  a  minority. 

We  have  according^  thought  best  to  address  ourselves  to  M.  Lemar- 
quis,  who  is,  by  virtue  of  his  legal  commission,  the  representative  of 
all  the  bondholders  without  exception. 

This  honorable  mandataire  of  justice,  approached  on  this  subject, 
has  responded  that  he  was  ready  to  join  his  efforts  with  ours  for  the 
accomplishment  of  the  canal.  But  he  has  observed  to  us  that,  if  the 
accomplishment  of  that  great  work  created  numerous  interests  com- 


PANAMA   (  ANAL  TITLE. 


271 


mon  to  the  stockholders  of  the  new  company  and  his  principals,  the 
bondholders,  he  consfdered  that,  in  order  to  represent  the  Latter  in 
your  council  with  independence,  he  could  not  accept  the  post  of  man- 
dataire  of  the  stockholders. 

We  have  recognized  those  obligations  as  well  founded,  and  in  order 
to  respond  to  the  desire  expressed  by  the  general  assembly  of  October 
20,  1894,  we  propose  to  you  to  authorize  your  council  by  special  res- 
olution to  join  with  itself  M.  Lemarquis,  judicial  mandataire  of  the 
bondholders,  to  have  the  right  to  take  part  in  all  the  sessions  of  the 
council  of  administration  with  a  consultative  voice,  and  to  propose 
there  any  measures  which  he  may  judge  proper. 

We  can  also  delegate  to  him,  by  application  of  article  29  of  our  by- 
laws, and  when  we  think  it  for  the  interest  of  our  company,  the  whole 
or  part  of  our  powers,  with  the  object  of  utilizing  in  an  effective 
manner  the  concurrence  which  he  has  consented  to  give  us. 

XVI. 

We  have  endeavored,  gentlemen,  to  present  to  }Tou  an  explanation 
as  clear  and  complete  as  possible  of  the  progress  of  }Tour  affairs. 

You  know  under  what  specially  difficult  circumstances  your  com 
pany  was  created,  and  how  we  were  called  upon  to  undertake  the  work 
of  reconstituting  the  business  of  the  Panama  Canal.  We  had  at  the 
beginning  everything  to  do  to  assure  its  being  carried  on,  and  every- 
thing to  learn  to  discover  the  truth  in  the  midst  of  the  contradictory 
and  sometimes  impassioned  views  to  which  it  has  in  the  past  given 
rise. 

We  have  not  thought  proper  to  act  at  all  after  forming  an  opinion 
conscientious  and  reasonable  concerning  facts,  a  great  number  of 
which  were  little  understood  or  badly  interpreted. 

We  find  the  Panama  Railroad  in  a  delicate  situation.  The  agree- 
ment to  be  signed  will  improve  the  circumstances  of  its  operation, 
and  the  establishment  of  maritime  installations  at  Panama,  which 
depend  onlv  upon  vour  vote,  will  contribute  to  the  development  of 
the  traffic. 

During  the  short  duration  of  an  administration  of  eight  months  we 
have  assured  the  rights  resulting  from  the  acts  of  concession  on  the 
point  of  escaping  from  the  liquidation  of  the  old  company.  We  have 
taken  possession  of  the  lands,  immovable  properties,  the  materiel,  and 
the  works  existing  on  the  Isthmus,  as  well  as  the  other  parts  of  the 
contribution.  We  have  looked  after  the  recruiting  of  the  personnel, 
and  organized  the  activities  of  the  new  company.  We  have  taken  up 
again  the  works  of  the  canal,  and  have  given  to  them  a  methodical 
impulse  which  belongs  to  the  conducting  of  a  great  enterprise.  By 
examinations,  pursued  with  care,  we  have  disengaged  the  general  lines 
of  the  solution  to  be  adopted,  and  prepared  the  elements  to  be  sub- 
mitted to  the  deliberations  of  the  technical  committee  in  conformity 
with  article  31  of  our  by-laws,  to  arrange  the  definitive  project  of  a 
navigable  way  susceptible  of  great  traffic.  If  we  do  not  encounter 
one  of  those  difficulties  which  defies  human  foresight,  the  great  trench 
of  Culebra  will  be  greatly  lowered,  and  will  furnish  the  demonstration 
that  the  confident  hopes  of  the  promoters  and  the  stockholders  of  your 
company  may  become  a  reality. 

We  are  reaching  the  end  of  a  period  of  examination  and  organization 


272 


PANAMA   CAN  A  L  TITLE. 


of  plants  which  appeared  to  us  to  be  the  indispensable  condition  of 
success.    We  are  now  at  the  point  of  vigorously  attacking  the  works. 

St  rong  in  your  support  and  your  confidence,  we  are  resolved  to  pursue 
the  construction  of  the  canal  with  all  the  energy  of  which  we  are 
capable. 

REPORT  OF  THE  COUNCIL  OF  ADMINISTRATION  OP  THE  NEW  PANAMA 
CANAL  COMPANY  OF  DECEMBER  21,  1901. 

Gentlemen:  You  have  met  in  ordinary  general  meeting,  in  con- 
formity with  article  36  of  the  by-laws. 

Since  your  hist  meeting  we  have  pursued  regularly  the  continuation 
of  the  works,  notwithstanding  the  trouble  caused  on  the  Isthmus  by 
tin1  political  situation  and  the  revolutionary  crisis.  As  in  the  past, 
our  efforts  have  been  concentrated  upon  the  excavation  of  the  great 
central  trench,  and  especially  upon  that  part  of  it  at  Culebra. 

The  cubic  quantity  taken  out  during  the  year  is  1,080,000  meters, 
which  carries  the  total  cube  excavated  since  the  recommencement  of 
the  work  by  the  new  company  to  5,850,000  meters  for  the  entire 
trench.  The  depth  of  the  trench  is  lowered  by  this  to  an  altitude  of 
about  45  meters  above  sea  level  in  the  culminating  part  of  the  trench. 
We  are  excavating  now  on  a  large  scale  according  to  a  methodical 
working  organization,  with  a  view  to  the  final  section.  The  Panama 
Railroad  Company  has  reported  definitely  upon  its  proceedings  as  to 
the  partial  deviation  of  its  road  between  the  stations  of  Culebra  and 
Pedro-Miguel,  a  deviation  which  we  have  effected  to  permit  us  to  get 
rid  of  the  part  of  the  railroad  that  crossed  the  trench  at  the  exit  from 
the  Culebra  hill,  and  which  constituted  an  obstacle  to  the  work  of 
excavation. 

As  we  made  known  last  year,  we  are  continuing  in  a  regular  manner 
our  bydrological  observations,  which  are  of  serious  interest  for  the 
solution  of  problems  concerning  the  discharges  of  the  Chagres  and  its 
affluents,  both  at  low  water  and  during  floods. 

The  sanitary  condition  of  our  personnel  is  as  satisfactory  as  possible. 
In  a  personnel  of  agents  and  workmen  of  about  2,000  men,  we  have  to 
deplore  only  50  deaths,  of  which  11  were  from  causes  existing  in  all 
countries,  or  from  accidents  incident  to  the  work;  6  only  were  due  to 
maladies  of  the  climate. 

The  business  of  1900-1901  has  been  particularly  marked  by  our  rela- 
tions with  the  Government  of  the  United  States.  We  come  now  to 
the  part  of  our  report  which  has  to  do  with  those  relations.  We  limit 
ourselves  to  presenting  to  you  an  account  of  them  necessarily  con- 
densed, but  clear  and  precise. 

You  know  already  that  we  have  accepted  the  principle  of  a  cession 
to  the  Government  of  the  United  States  of  our  concession  and  of  all 
our  properties  on  the  Isthmus. 

In  execution  of  a  law  voted  by  the  Congress  on  March  3,  1899,  the 
President  of  the  United  States  has  appointed  a  special  Commission 
charged  with  examining,  in  all  its  aspects,  the  question  of  the  construc- 
tion of  an  interoceanic  canal  by  one  or  another  of  divers  routes  which 
may  present  themselves. 

You  are  not  ignorant  that  by  reason  of  the  formal  prohibition  stipu- 
lated in  article  21  of  our  law  of  concession  we  can  not  take  any  effect- 
ive action  in  the  way  of  a  sale  to  the  Government  of  the  United 


PANAMA   CANAL  TITLE 


2  73 


States  without  the  authorization  of  the  Colombian  Government. 
Through  its  minister  plenipotentiary  and  envoy  extraordinary  at 
Washington,  M.  Martinez  Silva,  the  Colombian  Government  acquainted 
us,  on  the  28th  of  March,  L901,  with  its  intent  ion  to  give  to  "  the  canal 
company  authority  to  transfer  its  concession  to  the  Government  of 
the  United  States,  upon  certain  conditions  concerning  the  two  Gov- 
ernments." 

This  intervention  took  away  the  prohibition  decreed  by  the  law  of 
concession  and  gave  us  the  power  to  enter  upon  negotiations  with  the 
Government  of  the  United  States  without  compromising  ourselves. 

With  a  view  to  the  carrying  on  of  those  negotiations  and  to  furnish 
for  them  a  rational  basis,  we  have  made  with  the  greatest  care  an  esti- 
mate of  our  properties  of  all  kinds  on  the  Isthmus  concession,  mate- 
riel, constructions,  works,  rights  as  to  the  railroad,  etc.  This  impor- 
tant work  divides  itself  into  articles  which,  all  together,  represent  a 
considerable  sum. 

In  transmitting  to  the  president  of  the  Isthmian  (anal  Commission 
(that  is  the  name  of  the  Commission  above  mentioned),  M.  Hutin, 
president  of  the  compan}r,  undertook  to  specify  the  nature  of  this 
work.    He  said  especially  in  his  letter  dated  October  4.  L901: 

I  desire  to  add,  Mr.  President,  that  these  are  simply  sums  to  which  we  are  led  by 
a  personal  valuing  which  we  are  making  of  the  different  elements,  to  be  discussed 
pro  and  con  in  the  negotiations,  and  which,  from  the  very  fact  of  those  negotiations 
between  independent  parties,  can  be  modified  to  an  extent  more  or  less  important. 
This  is,  then,  properly  speaking,  that  first  expression  of  the  views  of  the  company  to 
which  you  allude  in  your  letter  of  May  16  last  as  intended  to  serve  as  a  basis  lor  dis- 
cussion, as  concerns  us,  in  the  proposed  negotiations — negotiations  which  we  shall 
undertake,  believe  me,  with  the  greatest  desire  to  reach  a  reasonable  agreement.  We 
are  prepared  to  carry  to  them,  with  that  end,  a  sincere  spirit  of  conciliation  and  of 
concession,  hoping  that  we  will  find  on  the  other  side  the  same  spirit  and  the  same 
desire  to  reconcile,  in  an  equitable  manner,  the  serious  interests  before  us. 

These  statements  seemed  of  a  sort  to  prevent  all  misconceptions. 
There  has  occurred,  nevertheless,  an  incident  of  which  we  shall  give 
an  account. 

The  final  report  of  the  Isthmian  Canal  Commission  was  made  to  the 
President  of  the  United  States  at  the  end  of  last  month.  According 
to  the  findings  of  that  report  the  Commission  declares  itself  in  favor 
of  the  Nicaragua  route,  after  having,  however,  set  forth  faithfully  the 
numerous  advantages  of  the  Panama  route.  That  decision  is  based 
principally  upon  this  consideration,  that  the  price  fixed  by  the  Panama 
Canal  Company  is  so  high  that  the  Commission  can  not  recommend  its 
acceptance. 

We  believe  that  there  is  here  only  a  misconception,  for  the  company 
has  never  intended  to  fix  a  price,  but  only  to  offer  a  basis  for  discus- 
sion. The  communications  previously  received  permitted  it.  besides, 
to  count  upon  the  Commission's  lending  itself  to  that  discussion.  But 
the  Commission  has  considered  that  its  authorization  did  not  extend  to 
negotiating,  and  it  has  made  its  report,  stating  therein  as  the  price 
demanded  by  the  company  the  total  of  the  valuations. 

However  this  may  be,  it  is  important  to  correct  without  delay  that 
error.  It  seemed  to  us  that  the  report  of  the  Commission  furnished  a 
means  of  arriving  at  that  end  in  a  manner  such  as  to  leave  no  room 
for  doubt. 

Among  other  advantages  of  the  Panama  route  over  that  of  Nicaragua 
the  report  of  the  Commission  makes  prominent  a  decided  economy  in 

5751—02  18 


274 


PANAMA    CANAL  TITLK. 


the  cost  of  construction  and  an  annual  economy  in  the  expense-  of 
operation.  Here.  then,  is,  outside  of  the  technical  advantages,  a 
motive  of  preference  in  favor  of  the  Panama  Canal. 

We  shall  ask  you  at  once  to  give  us  all  power-  to  treat  with  the 
Government  of  the  United  States  under  the  reservation  of  submitting 
to  your  vote  of  approval  the  sum  settled  upon  by  the  Government  of 
the  United  States  and  the  agent  charged  by  us  to  carry  on  the  negotia- 
tions. But,  from  the  present,  we  desire  to  inform  you  that  our  nego- 
tiator will  receive  instructions  to  declare  to  the  American  Government 
that  we  are  ready  to  make  omissions  from  the  valuations  which  have 
been  considered  as  a  fixed  and  determined  price  from  that  point  of 
view  inadmissible,  and  that  we  shall  offer  to  take  for  the  basis  and 
point  of  starting  for  the  debate  which  we  ask  for  and  which  it  will  not 
decline,  as  we  believe,  the  figures  and  statements  contained  in  the 
findings  of  the  final  report  of  the  Isthmian  Canal  Commission.  We 
shall  give,  besides,  to  our  agent  the  power  to  close  the  discussion  upon 
proposing  a  fixed  price. 

Under  these  circumstances  it  seems  to  us  that  nothing  equivocal  can 
exist  as  to  our  attitude  and  our  intentions. 

We  hope  that  this  simple  and  categorical  offer  will  have  a  favorable 
influence  upon  the  future  negotiations.  On  one  hand  it  will  raise  for 
us  a  weapon  of  which  we  shall  not  fail  to  make  use,  in  letting  it  be 
known  that  our  conciliatory  intentions  are  not  accompanied  by  incon- 
sistent acts.  On  the  other  hand,  it  w  ill  bear  witness  to  our  confidence 
in  the  result  of  a  serious  valuation  of  our  properties,  whatever  method 
therefor  may  be  adopted. 

We  have  to  regret  to  see  separate  from  us.  upon  this  question,  our 
honorable  colleagues,  M.  Hutin.  president  and  director-general,  and 
M.  Choron.  administrator  and  director  of  the  works.  Their  resigna- 
tions, which  have  been  accepted,  leave  a  great  void  in  the  council,  which 
will  preserve  the  memory  of  their  wisdom  and  devotion. 

Death  has  taken  from  us  in  the  course  of  the  year  our  colleague, 
M.  Rouget,  former  inspector-general  of  finance.  You  will  join  us  in 
rendering  to  the  memory  of  M.  Rouget  a  sincere  testimonial  of  pro- 
found respect. 

Making  use  of  the  right  conferred  upon  us  by  article  23  of  the 
by-laws,  we  have  replaced  MM.  Hutin  and  Choron  by  MM.  Forot, 
former  comptroller-general  of  the  army,  and  Bourgeois,  former 
receiver  of  the  finances  at  Paris.  We  ask  you  to  ratify  these  nomina- 
tions, as  well  as  that  of  M.  Richmann,  whom  we  have  called  to  the 
council  upon  the  death  of  M.  Rouget.  M.  Richmann  is  recommended 
to  your  election  by  long  services  rendered  in  the  administration  of  the 
finances,  where  he  recently  occupied  the  high  post  of  central  receiver 
of  the  department  of  the  Seine. 

We  ask  of  you  also,  by  way  of  completing  the  council,  to  be  good 
enough  to  select  for  the  office  of  administrator  M.  Gueydan.  former 
negotiator  with  the  United  States. 

Gentlemen,  it  appears  to  us  superfluous  to  call  your  attention  to  the 
resolution  which  is  submitted  to  you  on  the  subject  of  the  attitude 
to  be  taken  with  regard  to  the  Government  of  the  United  States. 
After  a  conscientious  examination  of  the  situation  we  have  arrived  at 
this  conviction,  that  no  other  method  of  negotiations  is  adapted  to  the 
circumstance-. 

It  is  true,  and  we  should  call  your  attention  to  it.  that  the  solution  we 
propose  does  not  depend  exclusively  upon  the  agreement  to  be  reached 


PANAMA  CANAL  TITLE. 


275 


between  our  company  and  the  great  American  Republic.  This  solu- 
tion is  subjected,  besides,  to  the  arrangements  to  be  concluded  bel  ween 
the  Government  at  Washington  and  the  United  States  of  Colombia. 

Hut,  at  least,  in  the  sphere  which  belongs  to  us,  we  have  done  what 
is  demanded,  not  only  by  your  interests  but  by  those  that  take  their 
origin  in  the  old  Panama  Canal  Company. 

[Here  follow  four  resolutions,  one  approving  the  accounts  as 
reported,  two  concerning  current  business,  including  the  election  of 
the  officers  above  referred  to,  and  the  other  as  below:] 

The  general  meeting,  after  having  heard  the  report  of  the  council 
of  administration,  approves  the  conclusions  of  that  report  and  gives 
all  powers  to  its  council  of  administration  to  negotiate  the  cession  of 
the  properties,  concessions,  privileges,  etc.,  of  the  company  and  to 
contract,  under  the  reservation  of  ratification  by  the  stockholders. 


EXHIBIT  O. 

JUDGMENT  OF  AUGUST  2,   1901   (CIVIL  TRIBUNAL  OF  THE  SEINE), 
AUTHORIZING  THE  LIQUIDATOR  TO  CONSENT  TO  ARBITRATION. 

August  2,  1901. 

Request  for  the  Increase  of  the  Powers  of  the  Liquidator. 

[12th  Chamber,  No.  33.] 

[Taken  from  the  minutes  of  the  clerk  of  the  civil  tribunal  of  first  instance  of  the  department  of  the 
Seine,  sitting  at  the  palace  of  justice,  Paris  ] 

The  civil  tribunal  of  first  instance  of  the  department  of  the  Seine, 
in  session  in  the  palace  of  justice  in  Paris,  rendered  in  the  chamber  of 
the  council  the  decision,  the  tenor  of  which  is  as  follows: 

The  tribunal  assembled  in  the  chamber  of  the  council  in  view:  First, 
of  the  request  presented  by  Gautron  in  his  official  capacity,  signed  by 
Bieville.  attorney,  and  the  tenor  of  which  is  as  follows: 

To  MM.  the  President  and  Judges  composing  the  chamber  of  the 
council  of  the  civil  tribunal  of  the  Seine: 

M.  P.  Gautron,  liquidator  of  the  Compagnie  Universelle  du  Canal 
Interoceanique  de  Panama,  residing  at  the  seat  of  the  liquidation, 
Rue  de  la  Chaussee  d'Antin  No.  42,  M.  Bieville  acting  as  his  attorney, 
has  the  honor  to  state  to  you: 

That  the  judgment  of  the  civil  tribunal  of  the  Seine  dated  February 
4,  1881),  which  declared  the  dissolution  and  the  placing  in  liquidation  of 
the  Societe  du  Canal  Interoceanique  de  Panama,  has  appointed  M. 
Joseph  Brunet  as  liquidator  of  the  said  company  with  the  most  extended 
powers,  especially  to  cede  or  contribute  to  any  new  company  all  or  part 
of  the  corporate  assets,  to  make  or  ratify  with  the  contractors  of  the 
Panama  Canal  all  agreements  for  the  purpose  of  insuring  the  continu- 
ation of  the  works,  and  of  contracting  loans  and  furnishing  all  guar- 
antees thereto: 

That  the  tribunal  said  that,  in  case  of  the  disability  of  the  appointed 
liquidator,  his  place  should  be  rilled  by  the  usual  methods: 

That  it  thereupon  authorized  him  to  solicit  in  the  same  way  all 
special  powers  which  should  be  necessary  for  the  fulfillment  of  his 
mission,  and  if  he  judged  it  useful,  the  addition  of  one  or  more 
liquidators: 

That  M.  Achille  Monchicourt  was  named  assistant  liquidator  of  the 


276 


TANAMA   CANAL  TITLE. 


Compagnie  Universelle  du  Canal  Interoceanique  de  Panama  by  the 
judgment  of  the  chamber  of  the  council  dated  February  13,  1890; 

That  after  the  resignation  of  M.  Brunet,  M.  Achille  Monchicourl 
solicited  and  obtained  the  addition  of  M.  Gautron  joint  Liquidator  by 
the  terms  of  a  judgment  of  the  chamber  of  the  council  of  July  21,  J  893; 

Thai  in  consequence  of  the  death  of  M.  Achille  Monchicourt,  M. 
Gautron  remained  the  sole  Liquidator; 

That  the  liquidation  of  the  Compagnie  Universelle  du  Canal  Inter 
oceanique  de  Panama  is  at  this  moment  confronted  with  negotiations 
entered  into  by  the  Compagnie  Nouvelle  du  Canal  de  Panama  with  the 
Government  of  the  United  States  of  North  America  and  with  the 
eventuality  of  the  transfer  of  the  concession  and  canal  works  either  to 
the  Government  of  the  United  States  or  to  a  foreign  company; 

That  this  transfer  could  not  be  validly  made  by  the  new  company 
except  with  the  concurrence  and  assent  of  the  Liquidation  of  the  Com- 
pagnie Universelle  du  Canal  Interoceaniquc  de  Panama  and  of  the 
representative  of  the  bondholders  and  creditors  of  the  Liquidation; 

That  the  Liquidation  may  find  itself  in  disaccord  with  the  Compagnie 
Nouvelle  as  to  the  price  to  he  asked  or  the  conditions  to  be  proposed  to 
the  eventual  purchaser; 

That  there  exists  a  difference  of  interests  between  the  liquidation 
and  the  new  company  upon  the  subject  of  a  division  of  the  proceeds  of 
the  said  transfer: 

That  an'  immediate  discussion  might  bring  about  no  result  and  would 
be  of  a  nature  to  injure  the  result  of  negotiations  pending  with  an 
e\  entual  purchaser; 

That  it  is  essential  to  submit  the  questions  in  dispute  which  may 
arise  to  the  decree  of  amicable  arbitrators  charged  with  deciding  all 
questions  relating  to — 

Firstly.  The  determination  of  the  price  and  the  conditions  to  be 
proposed  to  the  eventual  purchaser; 

Secondly.  The  division  of  the  proceeds  of  the  sale  should  such  sale 
be  effected; 

That  the  right  of  liquidators  of  companies  to  compromise  is  con- 
tested by  certain  legal  authorities  as  exceeding  acts  of  their  adminis- 
tration; 

That  it  is  therefore  necessary  to  solicit  from  the  tribunal  the  author- 
ity for  M.  Gautron  to  consent  to  an  arrangement  under  the  circum- 
stances above  stated,  and  in  the  case  of  a  sale  of  the  concession  and 
the  canal  works  as  well  as  all  of  the  assets  of  the  Compagnie  Nouvelle. 

Wherefore  the  petitioner  prays  that  it  may  please  the  president  and 
judges  to  authorize  him  in  his  capacit}^  of  liquidator  of  the  Compagnie 
Cuivei'selle  du  Canal  Interoceanique  de  Panama  to  pass  an  agreement 
with  the  Compagnie  Nouvelle  du  Canal  de  Panama  upon  all  matters  of 
dispute  which  may  arise  in  connection  with — 

Firstly.  The  determination  of  the  price  and  the  conditions  to  be  pro- 
posed to  the  eventual  purchaser  of  the  concession  and  canal  works  and 
all  the  assets  of  the  new  company; 

Secondly.  The  division  of  the  proceeds  of  the  sale  between  the  new 
company  and  the  liquidation  of  the  Panama  Canal  Company  should 
such  sale  be  effected. 

Under  all  reserves. 

And  this  will  be  justice.  De  JBieville. 


PANAMA  CANAL  TITLE. 


277 


In  view,  secondly,  of  the  decree  of  the  president  of  the  tribunal 
being  as  follows,  the  above  request  shall  he  communicated  to  the 
attorney  for  the  Republic  in  his  office,  and  we  appoint  Vice-President 
Laporte  to  make  his  report. 

Paris,  the  31st  day  of  July,  1901.  Baudoin. 

In  view,  thirdly,  of  the  conclusions  of  the  attorney  for  the  Republic, 
which  are  as  follows,  the  attorney  for  the  Republic  does  not  object. 
Rendered  in  the  attorney's  office  August  2,  1901. 

Pezous. 

In  view,  fourthly,  of  the  various  documents  submitted, 

Having  heard  Vice-President  Laporte  in  his  report,  the  attorney  for 
the  Republic  in  his  conclusions,  and  after  having  deliberated  in  con- 
formity with  law,  judging  in  first  instance: 

Whereas  by  a  judgment  of  this  chamber,  dated  July  21,  1893, 
Achille  Monchicourt  petitioned  for  and  obtained  the  addition  of  Gau- 
tron  as  coliquidator  of  the  Compagnie  Interoceanique  de  Panama: 

Whereas,  in  consequence  of  the  death  of  Achille  Monchicourt,  Gau- 
tron  remained  the  only  liquidator; 

Whereas,  from  the  documents  submitted  it  appears  that  it  is  neces- 
sary to  authorize  Gautron  to  consent  to  a  compromise  in  compliance 
with  his  request; 

For  these  reasons: 

Authorizes  Gautron,  in  his  official  capacity,  to  consent  to  a  compro- 
mise with  the  Nouvelle  Compagnie  du  Canal  de  Panama  upon  all  liti- 
gious questions  which  might  arise  relating — 

Firstly.  To  the  determination  of  the  price  and  conditions  to  be  pro- 
posed to  the  eventual  purchaser  of  the  concession  and  the  canal  works 
and  all  the  assets  of  the  new  company; 

Secondly.  To  the  division  of  the  proceeds  of  the  sale,  if  that  sale 
should  be  effected,  between  the  new  company  and  the  liquidation  of 
the  Panama  Canal. 

La  Porte, 
Le  Berquier, 
Floquet. 

Ordered  and  decreed  in  the  chamber  of  the  council  of  the  civil  tri- 
bunal of  the  first  instance  of  the  department  of  the  Seine,  sitting  in 
the  palace  of  justice  in  the  city  of  Paris,  by  Laporte,  president;  Ber- 
quier, judge:  Planehenault,  special  judge:  in  the  presence  of  M. 
Pezous,  substitute  for  the  attorney  for  the  Republic,  assisted  by  Flo- 
quet, clerk. 

August  2,  1901. 

(In  consequence,  etc.,    *    *  *) 

The  minute  was  signed  by  the  president,  the  reporting  judge,  and 
the  clerk. 

Recorded  at  Paris  the  19th  of  August,  1901,  folio  94,  division  first. 
Received  9  francs,  38  centimes,  decimes  included. 

Varinot. 

A  true  copy. 

Floquet. 


278 


PANAMA  CANAL  TITLE. 


EXHIBIT  P. 

RESOLUTION  OF  DECEMBER  23,  1901,  OF  THE  COUNCIL  OF  THE 
ADMINISTRATION  OF  THE  NEW  PANAMA  CANAL  COMPANY,  TO 
AGREE  TO  ARBITRATE  WITH  THE  LIQUIDATOR. 

EXTRACT 

of  the  minutes  of  the  meeting  of  December  23,  1901, 


Were  present  :    MM.  B6. 

Bourgeois, 
Couvreux, 
Forot, 
Guevdan. 

Le  Baron  do  Lassus  St.  Genies, 

Georges  Martin, 

Monvoisin, 

Rischmann, 

Terrier. 

Samper,  representing  the  Colombian  Gov- 
ernment. 

The  board,  after  discussion,  resolves,  unanimously,  to  enter  into  the 
proposed  agreement  with  M.  Gautron.  liquidator  of  the  Compagnie 
Universelle,  and  gives  all  powers  to  MM.  Bo  and  Monvoisin  to  sign 
same  agreement. 

The  president  of  the  Council  of  Administration, 

(Signed)  B6. 


EXHIBIT  Q. 

AGREEMENT  OF  DECEMBER  24,  1901,  REGARDING  ARBITRATION. 
Between  the  Undersigned: 

1st.—  M.  Jean  Pierre  Gautron,  acting  in  his  capacity  of  Liquidator 
of  the  Compagnie  Universelle  du  Canal  Interoceanique  de  Panama. 

2nd. — The  Compagnie  Nouvelle  de  Panama  represented  by  MM. 
Marius  Bo  and  Monvoisin,  Administrators,  by  virtue  of  a  resolution  of 
the  Council  of  Administration  dated  December  23,  1901. 

It  has  been  stated  and  agreed  as  follows — 

Statement: 

By  the  terms  of  article  52  of  the  by-laws  of  the  New  Panama  Canal 
Company,  the  profits  of  the  enterprise,  such  as  had  been  determined 
by  article  51,  were  to  be  divided  between  the  stockholders  of  the  New 
Panama  Canal  Company  and  the  Liquidation  of  the  Compagnie  Uni- 
verselle de  Panama  in  the  proportion  of  40%  to  the  former  and  60% 
to  the  latter. 

As  negotiations  may  be  opened  for  the  sale  of  the  Panama  Canal 
enterprise  to  the  Government  of  the  L^nited  States  of  North  America, 
a  sale  which  would  modify  profoundly  the  conditions  of  its  contribu- 
tion to  the  enterprise,  the  Liquidation  of  the  Compagnie  Universelle 


PANAMA  CANAL  TITLE. 


279 


has  hold:  1st. — That  those  negotiations  could  not  be  carried  on  without 
its  intervention;  2nd. — That  the  price  of  the  9ale  could  not  be  fixed 
except  in  agreement  with  the  Liquidation;  3rd. — That  the  share  to 
go  to  the  Liquidation  in  the  said  proceeds  should  be  larger  than  the 
proportion  iixed  by  article  52,  on  account  of  the  damage  sufferod  by 
the  Liquidation  from  the  fact  of  the  sale  and  the  consequent  abandon- 
ment of  its  rights  to  the  eventual  future  profits  of  the  enterprise. 

While  maintaining  a  contrary  opinion  upon  these  three  points,  the 
New  Company  has  admitted  that,  as  a  matter  of  fact,  in  default  of  a 
previous  agreement  with  the  Liquidation,  there  might  be  difficulty  in 
bringing  the  negotiations  to  a  successful  conclusion.  It  therefore 
proposed  that  the  direction  of  the  negotiations  and  the  power  to  treat 
should  be  accorded  to  the  New  Company,  remarking,  on  the  one  hand, 
that  they  could  with  difficulty  be  conducted  by  two  persons,  and  on 
the  other  hand,  that  the  pecuniary  interests  of  the  Company  which, 
moreover,  appears  as  alone  invested  with  ownership,  so  far  as  third 
parties  are  concerned,  gave  all  necessary  guaranty  to  the  Liquidation 
for  the  conduct  of  the  negotiations  and  their  eventual  conclusion;  and 
it  offered  to  submit  to  the  decision  of  a  Tribunal  of  Arbitration  the 
third  claim  of  the  Liquidation  of  the  Compagnie  Universello. 

Coinciding  with  these  views,  M.  Gautron,  Liquidator  of  the  Com- 
pagnie Universelle,  in  accord  with  M.  Lemarquis,  the  judicial  rep- 
resentative of  the  bondholders,  on  the  one  hand,  and  the  New  Panama 
Canal  Company,  on  the  other  hand,  have,  under  the  advice  of  their 
counsel,  entered  into  the  following  agreement: 

AGREEMENT: 
Article  First: 

The  New  Panama  Canal  Company  alone  remains  charged  with 
carrying  on  the  negotiations.  It  shall  have  full  powers  to  conclude 
eventually  with  the  Government  of  the  United  States  and  to  tix, 
after  discussion  with  it,  the  price  and  conditions  of  the  sale. 

Article  Second: 

A  Tribunal  of  Arbitration  is  hereby  appointed,  charged,  from  now 
on,  with  the  determining  the  proportions  in  which  the  proceeds  of  the 
sale  shall  be  assigned  to  the  New  Panama  Canal  Compan}'  and  to  the 
Liquidation  of  the  Compagnie  Universelle. 

This  Tribunal  of  Arbitration  shall  be  composed  of  five  members. 

Article  Third: 

The  New  Company  designates: 
MM.  Du  Buit  and  Leon  Devin. 

M.  Gautron,  in  his  official  capacity,  designates  on  his  side: 
MM.  Limbourg  and  Henri  Thieblin. 

The  two  parties  have  agreed  to  designate  as  fifth  arbitrator  M. 
Betolaud,  late  chairman  of  the  Bar  Association. 

Article  Fourth: 

The  arbitrators  shall  render  their  decision  within  the  month  whick 
will  follow  the  convening  of  the  Tribunal  of  Arbitration. 


280 


PANAMA   CANAL  TITLE 


They  are  freed  from  the  rules  and  forms  of  procedure;  they  shall 
decide  as  amicable  arbitrators,  without  appeal  or  recourse  to  the 
Supreme  Court. 

Article  Fifth: 
The  present  agreement  is  made: 

1st.  So  far  as  concerns  the  Liquidator  of  the  old  Company,  by 
virtue  of  the  authority  to  compromise  which  was  conferred  upon 
him  by  the  judgment  of  the  Chamber  of  the  Council  of  the  Civil 
Tribunal  of  the  Seine  dated  August  2nd,  L901. 

2nd.  So  far  as  concerns  the  New  Company,  by  virtue  of  the  powers 
which  art  Lcle  28 of  the  by-laws  confers  upon  the  Council  of  Administra- 
tion, but  subject  to  final  approval  by  the  general  meeting  of  shareholders 
of  the  conditions  of  the  transfer  to  the  United  States  Government. 
Done  in  duplicate  at  Paris,  the  24th  of  December,  1901. 
Read  and  approved,  Read  and  approved, 

Signed:  M.  Bo.  Signed:  Gautron. 

Read  and  approved. 

Signed:  M.  Monvoisin. 

New  Panama  ('anal  Company 

Joint  Stock — Capital:  65  millions  of  francs. 

Corporate  oflice:  7  rue  Louis  le  Grand,  Paris. 


EXHIBIT  R. 

AWARD  OF  ARBITRATORS,  FEBRUARY  11,  1902. 

In  the  year  one  thousand  nine  hundred  and  two  and  on  the  twenty- 
first  of  January  at  nine  o'clock  in  the  evening,  in  the  study  of  M.  Beto- 
laud,  former  President  of  the  Bar,  25  Avenue  Marceau,  at  Paris,  and  in 
his  presence,  met  MM.  du  Buit,  former  President  of  the  Bar,  Leon 
Devin,  former  President  of  the  Bar,  Limbourg  and  Henri  Thieblin,  bar- 
risters of  the  Court  of  Appeal  of  Paris,  all  five  appointed  arbitrators  by 
the  agreement  of  compromise  hereinafter  mentioned.  And  thereupon 
appeared  before  them  MM.  Marius  Bo  and  Monvoisin,  administrators 
of  the  New  Panama  Canal  Company,  in  the  name  of  which  they  act, 
attended  by  Me.  Dubourg,  attorney  of  the  Court,  and  counsel  of  the  New 
Panama  Canal  Company.  A  letter  was  read  from  M.  Gautron,  Liquida- 
tor of  the  Compagnie  Universelle  du  Canal  Interoceanique  de  Panama, 
who  excused  himself,  on  account  of  the  state  of  his  health,  for  not  being 
able  to  attend  the  hearing.  In  his  absence  Me.  de  Bieville,  counsel 
of  the  Liuidation,  represented  his  interests.  Finally  appeared  M. 
Lemarquis,  acting  as  legal  representative  of  the  bondholders  of  the 
Compagnie  Universelle  du  Canal  Interoceanique  de  Panama. 

After  the  reading  of  the  agreement  of  compromise  of  December  ^4th, 
1901,  which  will  be  annexed  to  these  presents  and  recorded  at  the  same 
time  with  them,  MM.  Bo  and  Monvoisin  called  upon  the  five  arbi- 
trators appointed  to  state  whether  they  accept  the  office  conferred 
upon  them.  MM.  de  Bieville  and  Lemarquis  state  that  they  have  no 
objection  to  make  to  this  request  and  that  they  unite  in  it,  so  far  as 
may  be  necessary. 


PANAMA  CANAL  TITLE. 


281 


Whereupon  the  five  arbitrators  appointed  stated  that  they  accepted 
the  duties  confided  to  them  and  they  immediately  organized  as  a  tribunal 
of  arbitration  under  the  presidency  of  M.  Betolaud. 

And  they  signed,  after  reading,  with  the  parties  present  and  their 
counsel. 

Signed:  M.  Bo,  Monvoisin,  A  de  Bieville,  Dubourg,  Leon  Devin, 
Du  Suit,  Henri  Thieblin,  Limbourg,  A.  Betolaud,  Lemarquis. 

And,  without  adjournment,  we,  the  arbitrators,  declared,  in  agree- 
ment with  the  parties  present,  the  hearing  opened. 

Thereupon  Me.  de  Bieville  spoke  in  the  name  and  on  behalf  of  the 
Liquidation  of  the  Compagnie  U niverselle  du  Canal  Interoceanique  de 
Panama,  to  state  the  matter  in  dispute  and  to  support  the  claims  of  the 
Liquidation,  reserving  the  right  to  file  a  brief  later. 

After  which,  at  half -past  eleven  o'clock,  we,  the  Arbitrators  sus- 
pended the  hearing,  and  adjourned,  in  agreement  with  the  parties 
present,  to  Monday  the  27th  of  the  current  month,  at  half -past  eight 
o'clock  in  the  evening,  at  the  same  place  as  above,  to  hear  the  explana- 
tions which  will  be  presented  by  the  New  Company,  it  being  agreed 
by  both  sides  that  upon  that  day  the  parties  shall  file  written  briefs. 
And  we  signed  with  the  parties  after  reading. 

Signed:  M.  Bo,  Monvoisin,  A.  de  Bieville,  Dubourg,  Leon  Devin, 
H.  du  Buit,  Henri  Thieblin,  Limbourg,  A.  Betolaud,  Lemarquis. 


On  the  fourth  of  February  in  the  year  one  thousand  nine  hundred 
and  two,  at  half-past  eight  o'clock  in  the  evening,  we,  the  five  arbi- 
trators named  in  the  preceding  minutes,  met  in  the  study  of  M.  Beto- 
laud, one  of  us.  And  before  us  appeared:  M.  Jean  Pierre  Gautron, 
judicial  Liquidator  of  the  Compagnie  Universelle  du  Canal  Interoce- 
anique de  Panama,  M.  Henri  Boudet,  Secretary  General  of  the  said 
Company,  M.  Lemarquis,  Representative  of  the  bondholders  of  the 
Panama  Company,  M.  Marius  Bo  and  M.  Monvoisin,  representing  the 
New  Panama  Company.  It  was  thereupon  explained  that  the  hearing 
which  was  to  have  taken  place  on  the  date  of  Monday,  January  27th, 
was  adjourned  at  the  request  of  both  parties,  and  postponed,  by  agree- 
ment, to  to-day  at  the  same  place  and  time.  M.  de  Bieville  tiled  a 
brief  in  the  name  of  the  Compagnie  du  Canal  Interoceanique  de  Pan- 
ama in  liquidation,  and  undertook  to  furnish,  in  48  hours,  a  copy  on 
stamped  paper  to  be  annexed  to  these  presents.  The  floor  was  given 
to  M.  Chaumat,  advocate  of  the  Court  of  Appeal,  present  and  assist- 
ing the  representatives  of  the  New  Panama  Canal  Company. 

And  at  this  moment  M.  Gautron,  prevented  by  his  health  from 
being  present  at  the  tirst  meeting,  stated  that,  having  examined  the 
foregoing  minutes,  he  gave  his  full  consent  thereto.  And  foreseeing 
that,  for  the  same  reasons  of  health,  it  would  not  be  possible  for  him 
to  remain  until  the  end  of  the  hearing,  he  reserved  the  right  to  with- 
draw when  he  should  find  it  necessary,  delegating  henceforth  all  his 
powers  to  M.  Boudet,  Secretary  General  of  the  Company  in  liquida- 
tion.   And  he  signed,  in  this  place,  the  present  statement. 

Signed:  Gautron. 

M.  Chaumat  set  forth  the  arguments  which  the  New  Company  under- 
took to  file  on  stamped  paper  on  the  evening  of  the  day  after  to-mor- 


282 


PANAMA  CANAL  TITLE. 


row,  Thursday,  to  be  annexed  to  these  presents.  After  the  argument 
of  M.  Chaumat,  remarks  were  made  by  Me.  de  Bieville  in  reply,  and 
after  him  by  MM.  Lemarquis  and  Monvoisin,  in  the  presence  of  Me. 
Dubourg,  attorney,  who  came  in  during  the  course  of  the  hearing. 
None  of  the  parties  nor  their  counsel  desiring  to  be  heard  further,  the 
ease  was  closed,  the  arbitrators  reserving  the  matter  for  consideration 
among  them  later. 

The  hearing  was  closed  at  midnight  and  we,  the  arbitrators,  signed 
with  the  parties  and  their  counsel,  after  reading. 

Signed:  Henri  Thieblin,  A.  Betolaud,  Limbourg,  Leon  Devin, 
Dubourg,  Henri  Boudet,  Bo,  H.  du  Buit,  Monvoisin,  J.  Chaumat, 
A.  de  BieVille,  Lemarquis. 

And  just  as  they  were  about  to  withdraw,  MM.  Bo  and  Monvoisin, 
in  the  name  of  the  New  Company,  M.  Boudet,  as  substitute  for  M. 
Gautron  and  for  M.  Lemarquis,  representative  of  the  bondholders,  all 
acting  by  virtue  of  powers  conferred  upon  them,  stated  that  they 
waived  the  filing  of  the  decision  by  the  arbitrators  in  the  clerk's  office. 
The  original  of  the  decision  with  the  minutes  of  the  arbitration  and 
the  documents  annexed,  shall  be  placed  in  thehandsof  Me.  de  Bieville, 
the  attorney  of  longest  standing,  appointed  by  agreement  of  the  par- 
ties, who  shall  send  to  each  of  them  a  copy  of  the  decision,  certified 
by  him,  as  well  as  of  the  minutes.  And  the  parties  signed,  after 
reading. 

Signed:  M.  Bo,  Henry  Boudet,  Monvoisin. 


On  the  11th  of  February,  in  the  year  one  thousand  nine  hundred 
and  two,  at  half-past  eight  o'clock  in  the  morning,  we,  the  live  arbitra- 
tors, mentioned  in  the  foregoing  minutes,  met  in  the  study  of  M. 
Betolaud,  one  of  us,  where,  after  having  continued  our  consultations 
and  examined  anew  the  briefs  of  the  parties,  of  which  two  originals 
on  stamped  paper  have  been  heretofore  tiled,  one  by  the  liquidator, 
the  other  by  the  New  Company,  and  will  be  annexed  to  these  presents, 
to  be  recorded  at  the  same  time  with  it,  have  rendered  our  decision  as 
follows: 

The  Tribunal  of  Arbitration: 

Considering,  as  matter  of  fact,  that  on  the  occasion  of  the  negotiations 
entered  into  by  the  New  Panama  Canal  CornpamT,  with  the  consent  of 
the  Liquidator  of  the  Compagnie  Universelle  du  Canal  Interoceanique 
de  Panama,  with  a  view  to  a  sale  of  the  enterprise  to  the  Government 
of  the  United  States,  the  New  Company-  and  the  Liquidator,  having  to 
consider  in  what  way,  if  the  sale  should  take  place,  the  division  of  the 
price  of  sale  should  be  made  between  them,  could  not  agree  upon  the 
bases  of  this  division; 

That  the  New  Company  maintained  that  the  division  of  the  price 
should  be  made  in  conformity  with  the  provisions  of  Articles  51  and 
52  of  its  articles  of  incorporation,  in  this  sense,  that  the  New  Company 
would  have  the  right  to  take  out,  before  any  division,  the  total  amount 
of  its  corporate  capital,  and  that  the  remainder  of  the  price  should  be 
allotted,  60  per  cent,  to  the  Liquidator  and  40  per  cent,  to  the  New 
Company;  that  it  desired  it  to  be  noted,  however,  that  it  did  not 


PANAMA   CANAL  TITLK. 


283 


oppose  the  Liquidator's  being  authorized,  after  it  had  taken  out  its 
capital,  to  take  out  the  Bum  of  twenty  million  francs,  for  the  Panama 
Railroad  share-: 

That  the  Liquidator,  on  his  side,  maintained  that  the  articles  of  incor- 
poration had  not  settled  the  effect  which  a  sale  of  the  enterprise  should 
have  upon  his  relations  with  the  New  Company;  that  the  division  of 
the  price  of  this  sale  should  be  made  between  the  New  Company  and 
the  Liquidation,  after  taking  out  for  the  benefit  of  the  latter  a  sum 
of  twenty  million  francs  for  the  Panama  Railroad  shares,  in  the  pro 
portion  of  the  value  of  their  respective  contributions,  and  that,  in  any 
case,  the  Liquidation  should  receive  at  least  a  sum  equal  to  that  which 
a  side  of  the  assets  of  the  old  company  would  have  produced,  if  the 
New  Company  had  not  been  formed; 

That  it  was  in  view  of  this  disagreement  that  the  parties  agreed  to 
refer  to  amicable  arbitrators  the  settlement  of  the  dispute; 

Considering  that  the  first  question  to  be  settled  by  the  arbitrators  is 
to  ascertain  whether  the  provisions  of  the  articles  of  incorporation 
considered  literally  or  in  their  spirit,  are  applicable  to  a  division  of 
the  price  of  a  sale  between  the  two  parties  in  interest; 

That  it  is  proper,  for  this  purpose,  to  seek  in  the  articles  the  pro- 
visions by  which  the  contracting  parties  have  regulated  between  them- 
selves the  different  situations  which,  they  foresaw,  might  arise  in  the 
future; 

Considering  that  article  2  shows  that  the  object  of  the  Company  is, 
1st,  the  completion  of  the  canal;  2d,  its  operation;  3d,  the  construction 
and  operation  of  all  lines  of  railroad  in  the  vicinity  of  the  canal;  4th, 
the  exploitation  of  the  lands  granted  and  the  mines  therein  contained; 
all  subject  to  the  clauses  and  conditions  of  the  concession  granted  by 
the  United  States  of  Colombia; 

That  article  5  enumerates  the  contributions  made  by  the  Liquidator 
of  the  Compagnie  Universelle  du  Canal  Interoceanique  de  Panama, 
consisting  of  1st,  the  concession  itself  with  all  its  benefits  and  all  its 
burdens;  2d,  the  work  executed,  yards,  shops,  buildings,  hospitals, 
machinery,  materials  and  supplies,  deposits  as  security,  etc. ;  3d,  the 
plans,  estimates,  studies,  documents  of  every  nature  relating  to  the 
canal,  as  wrell  as  all  agreements  with  third  persons;  4th,  the  shares  in 
the  railroad  from  Panama  to  Colon,  operated  by  the  American  Com- 
pany called  the  Panama  Railroad  Company,  of  which  the  Liquidation 
is  the  owner; 

That  these  contributions  carried  the  entire  title  to  the  property: 

That  no  remuneration  was  provided  for  the  benefit  of  the  Liqui- 
dator who  made  them,  either  in  cash  or  in  shares; 

But  that  they  were  made  under  certain  reservations  and  conditions; 

That  it  was  provided,  in  the  first  place,  that  the  Liquidator  should 
have  60  per  cent,  of  the  net  profits  of  the  enterprise  as  fixed  by  articles 
51  and  52;  that  is  to  say,  after  deduction  of  the  share  promised  to  the 
Colombian  government,  of  the  expenses  of  maintenance,  operation  and 
administration,  of  the  sums  necessary  on  account  of  loans,  for  the  legal 
reserve  of  5  per  cent,  of  the  corporate  capital,  intended  to  insure 
the  amortization  of  the  shares,  and  to  pay  interest  upon  the  shares 
not  amortized,  and  of  5  per  cent,  for  the  benefit  of  the  council  of 
administration; 

That  50,000  full  paid  shares  were  set  apart  for  the  Government  of 
Colombia; 


284 


PANAMA  CANAL  TITLE. 


That,  as  to  the  Panama  Railroad  shares,  their  final  disposition  wag 
regulated  in  a  different  way  according  to  three  possible  events; 

That  it  was  said  in  Article  75  that,  when  the  New  Company  should 
have  expended  at  least  half  of  its  corporate  cash  capital  for  the  work 
to  be  done  upon  the  Canal  and  for  the  discharge  of  the  incumbrances 
resulting  from  the  contribution,  a  special  technical  commission  should 
pronounce  upon  the  results  gained  and  the  conclusions  to  be  drawn  for 
the  remainder  of  the  enterprise,  that  the  opinion  of  the  Commission 
should  he  made  public  and  that  a  special  stockholders3  meeting  should 
be  called  for  tin1  purpose^  of  considering  ways  and  means  tending  to  the 
completion  of  the  work,  and  the  stipulations  contained  in  Article  f>, 
sec.  -t,  No.  3; 

That  article  5  provided  that  the  Panama  Railroad  shares  should 
remain  the  property  of  the  New  Company  from  this  meeting,  with- 
out any  pecuniary  compensation,  but  upon  the  condition  subsequent 
of  the  construction  of  the  canal  within  the  period  fixed  by  the  conces- 
sion, and  that,  in  default  of  completion  within  this  period,  the  shares 
shall  revert  to  the  Liquidation; 

That  it  provided  furthermore  that  if,  contrary  to  all  expectation, 
the  meeting  should  not  take  the  necessary  action  for  the  completion 
of  the  Canal,  or  if  the  course  of  action  adopted  by  the  meeting  could 
not  he  carried  out.  the  shares  should  remain  the  property  of  the  New 
Company,  hut  it  should  pay  to  the  Liquidation  the  sum  of  twenty 
million  francs  by  way  of  indemnity  and  the  share  of  profits  set  apart 
for  the  Liquidation  should  be  half  the  profits  of  the  company  w  ith- 
out other  deduction  than  that  of  the  expenses  of  administration  and  of 
the  legal  reserve; 

That,  consequently,  the  shares  should  remain  inalienable  until 
either  the  payment  of  the  sum  of  twenty  millions  or  the  completion 
of  the  canal; 

Considering  that  it  results  from  these  provisions,  taken  together, 
that  the  object  aimed  at  hy  the  two  contracting  parties  was  the  com- 
pletion of  the  Canal  and  its  operation,  the  profits  of  this  operation, 
divided  annually  hetween  the  two  participants  in  the  proportion  of 
sixty  and  forty  per  cent.,  being  intended  alone  to  furnish  a  remunera- 
tion for  their  respective  contributions; 

That  they  had,  nevertheless,  considered  the  hypothesis  of  non- 
completion  of  the  Canal,  and  that,  in  this  case,  the  Liquidator  was  to 
take  back  part  of  his  contributions,  to  wit,  the  Panama  Railroad 
shares,  and  that  he  was  to  take  them  back  either  as  they  were,  or  in 
money  and  with  a  share  in  the  profits  of  the  operation  of  the  railroad, 
according  to  the  possible  events  above  taken  into  account; 

That,  in  short,  the  contracting  parties  had  considered  three  distinct 
hypotheses,  upon  the  accomplishment  of  which  were  to  depend,  in 
different  proportions,  the  rights  of  the  shareholders,  contributors  of 
cash  capital,  and  those  of  the  Liquidator,  contributor  without  pecuniary 
compensation  of  almost  all  the  assets  of  the  Liquidation  of  the 
Compagnie  Universelle  du  Canal  Interoceanique  de  Panama,  to  wit: 
1st,  the  completion  of  the  Canal  and  its  operation;  2d,  the  non-com- 
pletion of  the  Canal  after  the  voting  by  the  meeting  of  means  to 
complete  it  and  the  carrying  out  of  the  provisions  adopted;  3d,  the 
non-completion  of  the  canal  on  account  of  failure  of  the  meeting 
to  adopt  the  necessary  provisions,  or  failure  to  carry  out  these 
provisions; 


PANAMA  CANAL  TITLK. 


285 


Considering  that  the  proposed  sale  to  the  Government  of  the  United 
States  of  the  entire  assets  of  the  New  Company,  including-  the  Panama 
Railroad  shares,  docs  not  come  exactly  under  any  of  these  hypotheses; 

That  it  is,  in  fact,  neither  the  completion  of  the  canal,  nor  its  aban- 
donment under  the  special  circumstances  mentioned  in  the  articles  of 
incorporation; 

That  it  is  not  a  mere  abandonment  of  the  enterprise  as  contemplated 
in  article  5  of  the  articles  of  incorporation,  since  the  New  Company, 
intending  to  convey  to  the  Government  of  the  United  States  all  its 
assets,  including  the  Panama  Railroad  shares,  could  neither  restore 
them  to  the  Liquidator  as  they  are,  nor.  keeping  them  by  the  payment 
of  an  indemnity  of  twenty  million  francs,  afford  the  Liquidation  the 
share  of  50  %  which  it  had  undertaken  to  give  in  the  annual  profits 
from  the  operation  of  the  railroad; 

That  neither  is  it  the  completion  of  the  canal  under  the  circumstances 
contemplated  by  articles  5,  51  and  52  of  the  articles  of  incorporation. 

That  in  these  articles  was  contemplated  the  completion  of  the  canal, 
its  operation  by  the  New  Company  and  a  division  between  it  and  the 
Liquidator  of  the  annual  profits  of  operation; 

That  in  that  event  the  repayment  of  the  capital  of  the  New  Company 
was  assured  -only  by  means  of  a  sinking-f  unci  of  long  duration,  extend- 
ing* to  the  end  of  the  concession; 

That  the  annual  deduction  intended  for  the  sinking-fund  was  only 
5  %  of  the  corporate  capital; 

That  the  New  Company  was  preferred  only  to  this  limited  extent; 

That,  beyond  this,  the  remuneration  of  the  contributions  in  property 
made  by  the  Liquidator  and  of  the  contributions  in  cash  made  by  the 
shareholders  went  on  concurrent^  and  proportionally; 

That  the  claim  of  the  New  Company  to  take  out,  immediately  and 
by  way  of  preference,  from  the  price  of  sale,  the  whole  of  its  cash 
contribution  and  not  allow  the  Liquidator  to  participate,  except  in  the 
balance  of  the  price,  is  not,  therefore,  justified  by  the  provisions  of 
articles  51  and  52  of  the  articles  of  incorporation; 

Considering  that,  on  his  side,  the  Liquidator  maintains  that  the  divi- 
sion of  the  price  of  sale  should  be  made  in  proportion  to  the  compara- 
tive value  of  the  shares  of  the  two  contracting  parties  in  the  property 
to  he  transferred;  that  he  contends  that,  this  property  having  a  value 
of  565,500,000  francs  according  to  a  valuation  made  by  the  New  Com- 
pany itself,  the  share  of  the  New  Company  would  represent  a  value  of 
57,500,000  francs  and  that  of  the  Liquidation  508,000,000  francs,  so 
that  the  price  should  be  divided  in  the  proportion  of  58  565  for  the 
Liquidation  and  of  57  505  for  the  New  Company,  and  that,  in  any 
case,  the  Liquidator  should  receive  at  least  a  sum  corresponding  to  that 
which  he  would  have  got  from  a  sale  of  his  assets,  if  the  New  Com- 
pany had  not  been  formed;  that  he  estimates  this  sum  at  one  hundred 
and  twenty  million  francs; 

That  he  points  out,  in  support  of  his  position,  that  the  articles  of 
incorporation  did  not  regulate,  as  between  the  two  contracting  parties, 
the  consequences  of  a  sale  of  the  enterprise  and,  furthermore,  that  the 
New  Company,  in  not  completing  the  canal,  has  not  accomplished  the 
work  for  which  it  was  formed,  and  for  which  the  Liquidation  con- 
sented to  the  great  sacrifices  which  enabled  it  to  he  formed; 

But  considering  that,  if  the  sale  to  the  Government  of  the  dated 
States  cannot  be  assimilated  to  the  completion  of  the  canal  and  its 


286 


TAN  AM  A  CANAL  TITLE. 


operation,  and  if  it  is  true  that  the  New  Company  has  not  carried  out 
the  projected  enterprise,  we  cannot,  nevertheless,  fail  to  recognize  the 
importance  of  the  part  which  it  played  in  the  common  interest,  and 
wholly  deny  it  the  benefit  of  the  initial  agreements; 

That  it  is  the  more  necessary  to  take  these  initial  agreements  into 
account,  so  far  as  possible;  that  the  New  Company  accomplished,  in  the 
most  useful  way,  the  task  which  was  assigned  to  it,  at  least  as  a  pros- 
pecting company;  that,  especially  by  its  negotiations  and  at  its  expense, 
it  obtained  the  extension  of  the  concession,  an  extension  without  which 
the  enterprise  would  have  been  lost,  and  that  it  has,  by  its  work,  pru- 
dently and  economically  carried  on,  demonstrated  the  possibility  of 
completing  the  Canal  with  locks,  and  made  it  possible  to  fix,  with  more 
precision,  the  cost  and  duration  of  the  work  to  be  done  for  this  com- 
pletion; that  it  has  not  only  preserved,  but  also  greatly  improved  and 
increased  the  property  of  the  old  company  and  has  made  possible  either 
the  completion  of  the  enterprise  by  the  means  of  new  capital  to  be  pro- 
cured, or  a  sale,  such  as  that  which  is  now  proposed; 

That  it  has  therefore  attained,  in  part,  at  least,  the  object  aimed  at. 

Considering  that  the  same  reasons  which  led  to  a  rejection  of  the 
extreme  claims  of  both  parties,  leads  us  to  seek  for  a  solution  which 
approaches  as  nearly  as  possible  to  the  common  intention  of  the 
contracting  parties  as  it  can  be  made  out  from  the  articles  of  incor- 
poration; 

Considering  that,  so  far  as  concerns  the  Panama  Railroad  shares  the 
articles  of  incorporation  may  be  applied; 

That,  in  fact,  the  Canal  not  being  completed,  and  the  New  Company 
being  unable  to  restore  the  shares  as  they  are,  since  they  are  to  be 
included  in  the  sale,  it  should  be  decided  that  the  Liquidator  has  a  right 
to  the  indemnity  of  twenty  millions,  provided  by  article  5  in  case  of 
non-completion  of  the  canal; 

That,  moreover,  the  claim  of  the  Liquidator  to  this  preference  is  not 
opposed  by  the  New  Company; 

Considering,  for  the  rest,  that  in  default  of  an  exact  rule  to  be 
applied,  a  case  has  arisen  for  the  arbitrators  to  use  their  powers  of 
amicable  adjusters  which  have  been  expressly  conferred  upon  them, 
departing  as  little  as  possible  from  the  spirit  of  the  articles  of  incor- 
poration; 

Considering  that  there  should  be  set  aside  the  sum  of  five  million 
francs  which  was  devoted  by  the  New  Company  to  obtaining  on  April 
25th,  1900,  a  new  extension  of  the  concession; 

Considering  that  this  sum  served  directly,  in  the  common  interest, 
to  preserve  its  most  essential  possession; 

That  it  is  therefore  proper,  in  accordance  with  the  general  principles 
of  law,,  that  the  New  Company  should  first  take  out  said  sum  of  five 
millions,  after  the  twenty  millions  mentioned  above; 

Considering,  so  far  as  concerns  the  balance  of  the  price  of  sale,  after 
satisfaction  of  these  preferences,  that,  by  fixing  in  articles  51  and  52 
of  the  articles  of  incorporation  the  division  between  them  of  the  annual 
revenue  from  operation,  the  contracting  parties  have  given  an  indica- 
tion of  the  value  of  their  respective  contributions,  as  they  then  con- 
sidered them,  and  that  it  is  impossible  not  to  take  this  into  account  in 
the  division  of  the  proceeds  of  sale; 

That,  under  the  present  circumstances,  it  is  just  and  equitable  to 
make  this  the  basis  for  the  division  of  the  price; 


PANAMA  CANAL  TITLE. 


287 


Considering,  so  far  as  concerns  the  expenses,  that  in  view  of  the 
peculiar  character  of  the  case,  and  each  of  the  parties,  moreover, 
failing  in  part  of  its  claims,  they  should  be  combined,  and  it  should 
be  decided  that  they  be  borne  half  by  the  New  Company  and  half  by 
the  Liquidator; 

For  These  Reasons  Decides: 

1st.  That  the  consequences  of  a  sale  of  the  enterprise  are  not 
regulated  by  the  wording  of  the  articles  of  incorporation; 

Id.  That  the  Liquidator  of  the  Compagnie  Universelle  du  Canal 
Interoce*anique  de  Panama  shall,  before  any  division,  take  out  of 
the  price  of  the  sale  of  the  enterprise  to  the  Government  of  the 
United  States  the  sum  of  twenty  million  francs; 

3d.  That  after  this  sum  has  been  taken  out  the  New  Panama  Canal 
Company  shall  take  out,  on  its  side,  the  sum  of  five  million  francs; 

•±th.  That  the  balance  of  the  price  of  sale  shall  be  divided  between 
the  parties  entitled  in  the  proportion  of  sixty  per  cent,  for  the 
Liquidator  of  the  Compagnie  Universelle  du  Canal  Interoceanique  de 
Panama  and  of  forty  per  cent,  for  the  New  Panama  Canal  Company; 

5th.  That  the  remainder  of  the  demands,  propositions  and  requests 
of  the  parties  are  dismissed; 

6th.  That  the  expenses,  including  the  fees  of  the  arbitrators,  shall 
be  combined,  to  be  borne  half  by  each  of  the  parties; 

7th.  That  the  costs  which  the  filing  of  the  judgment  would  entail, 
including  registration  fees,  shall  be  borne  by  that  one  of  the  parties 
who  shall  have  made  it  necessary. 

And  we,  the  arbitrators,  have  signed  after  reading. 

Signed:  Henri  Thieblin, 
A.  Betolaud, 
Limbourg, 
Leon  Devin, 
H.  Du  Butt. 

Certified  a  true  copy. 

Signed:  De  Bieville. 


EXHIBIT  S. 

LAST  REPORT  (1901)  OF  THE  BOARD  OF  DIRECTORS  OF  THE  PANAMA 

RAILROAD  COMPANY. 

Board  of  directors,  1001. — J.  Edward  Simmons,  Edward  A.  Drake, 
Xavier  Boyard,  Samuel  M.  Felton,  William  B.  Franklin,  J.  H.  Par- 
ker, William  Nelson  Cromwell,  Vernon  H.  Brown,  Charles  Einsiedler, 
Robert  M.  Gallaway,  A.  Lawrence  Hopkins,  C.  B.  Comstock,  Mau- 
rice Hutin. 

Executive  committee. — J.  Edward  Simmons,  Edward  A.  Drake, 
William  Nelson  Cromwell,  Xavier  Boyard,  Vernon  H.  Brown. 

Officers. — J.  Edward  Simmons,  president,  New  York;  Edward  A. 
Drake,  second  vice-president  and  secretary,  New  York;  Sylvester 
Deming,  treasurer,  New  York;  Charles  Paine,  general  manager,  New 
York;  Sullivan  &  Cromwell,  general  counsel,  New  York;  R.  L. 
Walker,  traffic  manager,  New  York;  John  Adams,  auditor,  New 
York;  T.  H.  Rossbottom,  assistant  to  secretary.  New  York;  J.  R. 


288 


PANAMA  CANAL  TITLE. 


Shaler, general  superintendent,  Colon;  H.  G.  Preseott,  assistant  super- 
intendent, Colon;  P.  G.  Baker,  master  mechanic,  Colon;  F.  S.  Higbid, 
road  master,  Colon. 
General  offices,  No.  24  State,  street,  New  York. 


Panama  Railroad  Company, 

New  York,  March  27,  1002. 
To  the  stock  hol/lrrs  of  the.  Panama  Hall  road  Company: 

The  past  year  was  one  of  marked  activity  in  the  company's  affairs. 
The  report  of  the  general  manager,  with  the  accompanying  statement 
of  earnings  and  expenses  for  the  calendar  year  L901  and  the  treas- 
urer's balance  sheet  and  transcript  of  profit  and  loss  account,  will 
furnish  you  detailed  information  upon  the  physical  and  financial  aspects 
of  the  company's  properties  and  business. 

The  capital  stock  issue  of  $7,000,000  is  unchanged. 

The  present  outstanding  bond  issues  are: 


Sinking  fund  6  per  cent  subsidy  bonds: 

Original  issue  of   $3, 000,  000.  00 

(Being  payment  in  advance  until  HMO  of  the  annual  subsidy  of 
$225,000  to  the  Republic  of  Colombia.) 
Redeemed  bv  annual  sinking  fund  drawings,  including  $144,000 

drawn  in  1901   1 ,  798,  000.  00 


Outstanding  at  this  date   1,  202,  000.  00 

Of  those  outstanding  $206,000  are  owned  by  the  company  and 
held  in  its  treasury   206,  000.  00 


Leaving  in  the  hands  of  the  public   996,  000.  00 

By  the  operation  of  the  sinking  fund  provision  of  this  issue  all  of 
the  bonds  outstanding  will  be  redeemed  in  1908. 

First  mortgage  4^  per  cent  twenty- vear  gold  bonds: 

Authorized  issue  of  1  $4,  000,  000.  00 


Issued  to  the  public   2,  504,  000.  00 

Redeemed  by  annual  sinking  fund  drawings,  including  $141,000 

drawn  in  1901   561,000.00 

Held  in  the  company's  treasury   935,  000.  00 


$4,  000,  000.  00 

Through  the  operation  of  the  sinking  fund  this  indebtedness  will  be 
reduced  by  1917,  the  date  of  the  maturity  of  the  mortgage,  to  $1,199,000, 
and  constitute  the  only  mortgage  lien  upon  the  compan}T's  property. 

Since  the  declaration  of  the  previous  dividend  in  January,  1893,  in 
addition  to  the  payment  of  $250,000  annually  to  the  Colombian  Gov- 
ernment and  the  redemption  of  $561,000  of  the  company's  4i  per 
cent  first-mortgage  bonds  out  of  gross  earnings,  the  net  earnings  of 
the  company  amounted  to  $2,072,359.1:2,  or  29i  per  cent  upon  the 
capital  stock. 

Of  this  sum  your  directors  have  applied  to  the  development  and 
permanent  improvement  of  the  cornpamT's  property,  in  excess  of  the 
amount  of  the  2  per  cent  dividend  paid  in  March  last,  $1,755,509.01, 
in  the  purchase  and  betterment  of  its  steamships  and  floating  equip- 
ment, the  construction  of  the  La  Boca  Pier,  port,  and  terminal,  the 
acquisition  and  restoration  of  dredging  outfit,  the  installation  of  electric 
light  and  ice  plants,  etc. ,  and  in  general  so  improving  the  company's 


PANAMA  CANAL  TITLE.  289 

property  that  it  is  to-day  in  better  physical  condition  than  at  any  time 
in  its  history. 

The  port  and  terminal  at  La  Boca  having  been  completedand  opened 
to  commerce  on  January  1,  1901,  its  construction  account  was  closed, 
showing  a  total  cost  of  $2,148,308.69,  and  that  outlay  capitalized  into 
the  company's 4J- per  cent  first-mortgage  t  wenty-yeargold  bonds  author- 
ized for  that  purpose. 

As  contemplated  b}r  contracts  between  the  companies,  a  lease  has 
been  effected  from  the  canal  company  of  the  La  Boca  Branch  Kail- 
road  and  adjoining  lands  necessary  for  the  operation  of  tin;  terminal 
during  the  life  of  the  railroad  company's  concession,  or  until  1966, 
upon  mutually  satisfactory  terms.  The  use  of  dredges,  clapets,  and 
materials  necessary  for  the  operation  of  the  La  Boca  terminal,  belong- 
ing to  the  canal  company,  have  also  been  secured  under  lease,  upon 
reasonable1  terms. 

Owing  to  the  severance  of  relations  with  the  Pacific  Mail  Steamship 
Company,  the  company  put  on  a  line  of  chartered  vessels  between 
Panama  and  San  Francisco  direct,  to  maintain  its  coastwise  traffic. 
Charters  at  the  outset  were  difficult  to  obtain  and  very  expensive,  but 
later  better  conditions  prevailed.  The  volume  of  coastwise  traffic  was 
materially  increased  during  the  year,  but  the  very  large  outlay  required 
to  charter  ships  on  both  oceans  to  transport  it  was  burdensome  and 
represented  interest  on  a  capital  sum  which,  had  it  been  applied  by  the 
company  to  the  construction  of  new  vessels,  would  have  made  the  bus- 
iness highly  remunerative. 

The  company's  business  was  adversely  affected  by  political  disturb- 
ances on  the  Isthmus  of  so  grave  a  character  as  to  have  occasioned  the 
landing  there  by  the  United  States  Government,  under  its  treaty  obli- 
gations, of  its  armed  forces  to  maintain  free  transit  and  to  protect  this 
company's  property.  To  the  discreet  and  energetic  performance  of 
this  delicate  duty  by  the  naval  officers  to  whom  it  was  intrusted,  in  con- 
cert with  the  Colombian  authorities,  is  to  be  attributed  the  fact  that 
the  company's  property  was  not  materially  impaired.  These  facts, 
together  with  a  prolonged  labor  strike  in  San  Francisco  and  a  mate- 
rially reduced  coffee  output  in  Central  America  and  Mexico  during 
the  season  of  1900-1901,  considerably  affected  net  earnings,  but  these 
are  extraordinary  conditions  not  generally  encountered. 

During  the  year  an  important  deviation  of  the  railroad  at  Culebra, 
necessitated  by  canal  construction,  was  completed  and  put  in  operation; 
but  its  entire  cost  was  borne  and  paid  by  the  canal  company. 

The  condition  of  the  company's  property  has  been  fully  maintained 
and  many  improvements  added,  for  the  interesting  particulars  of  which 
I  refer  you  to  the  general  manager's  report. 

There  is  now  under  consideration  a  further  increase  of  the  facilities 
of  the  La  Boca  pier,  in  order  to  more  expeditiously  handle  the  increasing 
tonnage. 

The  result  of  the  company's  operations  during  the  last  year,  under 
what  was  referred  to  as  the  "open-door"  policy,  has  not  been  as  remu- 
nerative as  desired,  and  the  board  of  directors  are  considering  changes 
in  existing  traffic  arrangements  and  connections  at  Panama. 

I  refer  you  to  the  accompanying  reports  for  more  detailed  particu- 
lars. 

Respectfully  submitted. 

J.  Edward  Simmons,  President 

8751—02  19 


290 


PANAMA   CANAL  TITLE. 


Panama  Railroad  Company, 

New  York,  March  18,  1902. 
To  the  President  of  the  Panama  Railroad  Company. 

Sir:  I  respectfully  submit  the  following  report  of  the  business  and 
operations  of  the  Panama  Railroad  Company  for  the  year  ending 
December  31,  1901,  and  of  the  condition  of  the  company's  property 
and  finances  at  the  close  of  the  }rear. 

The  operations  of  the  year  show  the  following  results: 


Statement  of  earnings  and  expenditures. 


Earnings. 

1901. 

1900. 

Increase. 

Decrease. 

EARNINGS. 

H xxi/lr  o(X(l . 

V  Ull  Ml   III   I  (LIWUllcl. 

Krnm  froifht 

8606, 1ST).  65 
4, 182. 77 

52,254.08 
9, 695. 40 

39, 236.  81 

8505, 898. 92 

8100, 286. 73 

IPivhTYi  lroQaiii*o 

<JVI,  1  .»•).  uo 

45, 653.  70 

8,.51C.:VJ 

38,614. 86 

6,600.38 
1  148.81 
621.  95 

Pti'inmo  t C\  ( ^ C\\ t\l\ ' 

I  i  l  .  1 < 1  1  I  1  <  l    HI  V.  U1UJI. 

711, 554. 71 

608, 099.  52 

103, 464. 19 



590, 624. 07 
14, 334. 07 
4, 780.  47 
7, 400.  37 
36, 417.  87 

599, 178. 19 
19  XTiX  90 
5, 116.  47 
7, 890.  79 
37, 852. 07 

8  554. 12 

1,465. 87 

From  mails  

336. 00 
430. 42 
1,434.20 

From  extra  baggage  

From  passengers  

Total  earnings  of  railroad  

653, 616. 85 

662, 906.  72 

9.  2**.  S7 

1,365,171.56 

1.270,996. 24 

94, 175.  32 

Panama  Railroad  steamship  line. 
Atlantic  service: 



718, 607. 88 
4,951.65 
79,015.83 
2, 186. 69 

154,571.58 
7,517.21 

769,225. 62 
8,044.02 
60, 618. 30 
2,047.63 

128,234.78 
7,814.88 

50  617  74 
q  009  "^7 

O,            O  1 

18, 397. 53 

LS9.  Uu 

26, 336. 80 

From  passengers  

From  miscellaneous  

 1\ ■  W  V- 

29 / .  67 

Pacific  service: 

966, 850. 84 

975,  985. 23 

9,134.39 

349, 277. 33 
16,425.25 
120. 18 

5, 922. 06 
155.00 

343,355.27 
16,270.25 
120. 18 

365,  822.  76 

6,077.06 

3o9,  /45.  i0 

498,863.81  |  402,136.18 

96, 727. 63 

Total  earnings  

3, 196, 708. 97  |  2, 655, 194.  71 

541,514.26 

EXPENDITURES. 

Operating  expenses  of  railroad. 

40,  378. 20 
373,022.88 
116. 519. 83 

95,341.62 

40,216.25 
309, 516. 83 
116,518.87 

95,810.60 

161. 95 
63, 506. 05 
96 

Conducting  transportation  

Maintenance  of  equipment  

Maintenance  of  way  and  structures  

468.98 

Panama  Railroad  steamship  line. 
Atlantic  service: 

625, 262.  53 

562, 062. 55 

63, 199. 98 

585,877. 45 
117,202. 81 
164,929.38 

576, 391. 96 
116,689. 67 
140, 634.  79 

.  9,485.49 
513. 14 
24,294.59 

Agencv  expenses  

868,009.64  .  833,716.42 

34, 293. 22 



PANAMA   CANAL  TITLE. 

Statement  of  carniiKja  "/"/  e.rju'nrfilurcs — ( 'out  inuod. 


21)1 


Earnings. 


expenditures — continued. 

Panama  Railroad  steamship  line — Cojltinued . 

Pacific  service: 

Steamer  expenses  

Agency  expenses  «  

Charter  of  steamers  


Joint  railroad  and  steamship  expenses.. 

Total  operating  expenses  

Earnings  over  operating  expenses. 


Appropriations  for  depreciation  and  special  repairs 
of  tugs. 


Depreciation  of  tugs  

Replacement  of  boilers  and  special  repairs 
of  tugs  


Fixed  charges. 


Subsidy  to  Republic  of  Colombia  

Redemption  of  subsidy  bonds  

Interest  on  subsidy  bonds  

Interest  on  first-mortgage  bonds  

Redemption  of  first-mortgage  bonds  

Interest  on  balance  due  La  Boca  Wharf 
contractors  . 


Totalappropriationsandfixedcharges 


Net  income 


8216,580.21 
111,798.  89 
279, 659.  3:5 


S3, 801. 11 
8.92 
6, 650.  00 


$212, 779. 10 
111,789.97 
273, 009.  33 


321,164.78 


2,435,207.24  1,727,403. 


2, 100. 00  |  2, 100. 00 
3,000.00  3,000.00 


5, 100. 00 


5, 100.  00 


25, 000. 00 
144,240.00 
80, 760. 00 
70, 200. 00 
150, 000.  00 


25, 000. 00 
136, 080. 00 
88, 920. 00 
75, 926. 25 
150, 000. 00 


Increase. 


597. 578. 40 


12,731.86 


26,611.61    26,611.61 


■196,  81 1 .  61        -IT.").  '.126.  25      20,  SS5,  M 


501,911.61       481,026.25  20,885.36 


259,590.12  |  446,764.68 


1  >ecrease. 


8166,289.20 


8, 160. 00 
5, 726. 25 


187,174.56 


a  Includes  wharfage  at  La  Boca. 


Gross  revenue  receipts,  expenditures,  and  net  earnings  for  1901  com- 
pared, as  under,  with  those  of  1900: 


Earnings. 

Operating  ex- 
penses. 

Earnings 
over  oper- 
ating ex- 
penses. 

Appropria- 
tions for 
deprecia- 
tions, etc. 

Net  earn- 
ings. 

1901  :  

83, 196, 708. 97 
2, 655, 194.  71 

82,435,207.24 
1,727,403.  78 

8761,501.73 
927, 790.  93 

85, 100. 00 
5,100.00 

87.56,401.73 
922, 690. 93 

1900  

Increase  in  1901  

541,514.26 

707, 803.  46 

166,289.20 

166, 289. 20 
20,885.36 

 1  

187, 174. 56 

1 

292 


PANAMA  CANAL  TITLE. 


EARNINGS. 

RAILROAD. 

The  total  earnings  of  the  railroad  proper  show  an  increase  of 
$94,175.32,  or  7.41  per  cent,  in  1901  as  compared  with  previous  year, 
the  principal  increase  being  in  freight  traffic  west  bound. 

The  largest  increase  in  west-bound  freight  was  on  business  to  Sun 
Francisco,  amounting  to  over  10,000  tons;  freight  to  South  Pacific 
ports  increased  7,000  tons.  East-bound  freight  shows  a  decrease  of 
14,000  tons,  although  there  was  an  increase  of  12,000  tons  in  San 
Francisco  freight. 

There  was  an  increase  of  17.01  per  cent  in  earnings  on  all  west- 
bound traffic,  and  a  decrease  of  1.40  per  cent  on  all  east-bound  traffic. 

The  following  table  shows  the  freight  tonnage  carried  over  the 
railroad  in  1901  as  compared  with  1900: 


Year  ending  Dec.  31- 

Increase. 

Decrease. 

1901. 

1900. 

Carried  west  bound  a  

Tons. 
195, 743 
189,841 

Tons. 
153,  758 
203,619 

Per  cent. 
27. 31 

Per  cent. 

Carried  east  bound  n  

6.77 

Total  east  and  west  bound  a  

385,584 

357,377  1  7.89 
1 

a  Ton  of  2,000  pounds,  or  40  cubic  feet. 

The  gross  earnings  per  ton  moved  on  the  road  compare  as  follows: 

Year  ending  Dec.  31— 

Increase. 

Decrease. 

1901. 

1900. 

West  bound  

83. 10 
3. 11 

S3. 29 
2.94 

Per  cent. 

Per  cent. 
5.78 

East  bound  

5. 78 

Average  east  and  west  bound  

3.10 

3.09 

.32 

Table  No.  4,  attached  to  this  report,  shows  the  origin  and  destination 
of  the  freight  carried  over  the  railroad. 

Compared  with  1900  the  total  tonnage  carried  over  the  road  in  1901 
shows  an  increase  of  28,207  tons,  or  7.89  per  cent,  and  the  earnings  an 
increase  of  $91,732.61,  or  8.30  per  cent.  A  comparison  of  1900  with 
1899  shows  an  increase  in  tonnage  of  24.35  per  cent,  and  in  earnings  of 
15.83  per  cent. 

Of  the  total  tonnage  carried,  50.  77  per  cent  was  west  bound  and  49.23 
per  cent  east  bound.  In  1900  these  percentages  were  43.02  per  cent 
and  56.98  per  cent,  respectively. 

The  proportion  of  through  traffic  to  the  total  tonnage  handled  was 
81.70  per  cent;  in  1900  through  freight  amounted  to  87.11  per  cent. 
Of  the  through  freight,  55.12  per  cent  was  New  York  business. 

Earnings  from  mails  amounted  to  $57,034.55,  an  increase  of  $6,264.38, 
or  12. 34  per  cent. 


PANAMA  CANAL  TITLE. 


293 


The  following  statements  show  the  number  of  passengers  carried  and 
the  passenger  earnings: 

Number  of  passengers  carried. 


Classification. 

1901. 

1900. 

Increase. 

Decrease. 

4,587 
84, 574 

5,590 
77, 642 

Per  cent. 

Per  cent. 
17.94 

Total  

8. 93 

89, 101 

83, 232 

7. 12 

Passenger  earnings. 

Classification. 

1901. 

1900. 

Increase. 

Decrease. 

$28, 507.  47 
47,147.21 

831,375.56 
45,091.37 

Per  cent. 

Per  cent. 
9. 14 

4.56 

75, 654. 68 

76, 466.  93 

1.06 

Average  receipt  per  passenger. 

Classification. 

1901. 

1900. 

[ncrease. 

Decrease. 

First-class  passengers: 

Through  

88.98 
3.73 

3.77 
.47 

$8. 97 
3.44 

1.92 
.51 

Per  cent. 
0. 11 
8. 43 

96.35 

Per  cent. 

Local   

Second-class  passengers: 

Through  

7.84 

First-class  passengers  decreased  1,003,  or  17.94  per  cent,  in  number, 
and  §2,868.09,  or  9.14  per  cent,  in  earnings.  Second-class  passengers 
increased  6,932  in  number,  or  8.93  percent,  and  $2,055.84,  or  4.56  per 
cent,  in  earnings.  The  increase  of  96.35  per  cent  in  the  average  receipt 
per  second-class  through  passenger  was  due  to  the  falling  otf  in  the 
movement  of  laborers  from  the  West  Indies  to  Guayaquil,  carried  at 
a  low  contract  rate. 

STEAMSHIP  LINES. 

The  total  earnings  of  the  Atlantic  Line  from  all  sources  was 
$966,850.84,  a  decrease  of  $9,134.39,  or  0.94  per  cent.  Freight  traffic 
shows  a  loss  of  $50,617.74  in  earnings,  or  6.58  per  cent,  dm1  to  the 
large  falling  otf  in  business  from  South  Pacific  ports.  The  decrease 
in  freight  receipts  was  nearly  offset  by  an  increase  of  $1S,3J*7.53,  or 
3  .35  per  cent,  in  mail  earnings,  and  an  increase  of  $26,336.80,  or 
20.54  per  cent,  in  passenger  earnings. 

Of  the  total  tonnage  transported,  119,413  tons  were  carried  by  the 
company's  steamers  and  62,772  tons  by  chartered  steamers. 

The  Pacific  Line,  inaugurated  in  December,  1900,  was  maintained 
during  the  year  with  the  result  as  shown  in  the  statement  on  page  8.a 


«  Paging  refers  to  Fifty-second  Annual  Report  of  the  Board  of  Directors  of  the 
Panama  Railroad  Company  for  1901 . 


294 


PANAMA  CANAL  TITLE. 


JOINT  RAILROAD  AND  STEAMSHIP  RECEIPTS. 

The  net  result  of  the  earnings  of  all  the  accounts  grouped  under 
this  heading  increased  $96,727.63  over  1900,  or  24.05  per  cent. 

The  following  table  will  show  the  number  of  tons  lightered  in 
Panama  Bay  and  handled  on  La  Boca  wharf  during  the  year  1901,  as 
compared  with  cargo  lightered  in  1900: 


1901. 

1900. 

• 

Increase. 

Tons. 
210,144 
409 
22,286 

Tons. 
188, 936 
265 
5, 682 

Per  cent. 
14.40 
60.39 
292. 22 

Lumber  

Coal  

Total  

238, 839 

194,873 

22. 56 

EXPENDITURES. 

The  revenue  expenditures  of  1901  and  1900  compare  as  under: 


1901. 

1900. 

Increase. 

Railroad  

8625, 262. 53 

868.009.64 
608,038. 43 
333, 896. 64 
5, 100. 00 

$.562,062.55 

833, 716. 42 
10,  460. 03 
321,164.78 
5, 100.  00 

$63, 199. 98 

34,  293. 22 
597, 578. 40 
12, 731. 86 

Steamship  line: 

Atlantic  service  

Pacific  service  

Joint  railroad  and  steamship  expenses  

Appropriations  for  depreciation  and  special  repairs  to  tugs.. . 

Total  

2, 440,  307.  24 

1,732,503.78 

707, 803.  46 

This  table  shows  an  increase  of  $707,803.46  in  total  revenue  expend- 
itures, while  there  was  an  increase  of  $541,514.26  in  total  earnings. 
(See  pp.  8,  10.  )a 

RAILROAD. 


Conducting  transportation. — The  expenses  of  this  department  show 
an  increase  of  $63,506.05,  or  20.52  per  cent,  as  compared  with  1900. 
The  tonnage  moved  increased  28,207  tons,  or  7.89  per  cent. 

The  accounts  show  a  considerable  increase  in  the  cost  of  labor,  of 
fuel,  and  of  supplies  av  hen*  compared  with  last  }rear.  There  has  been 
no  increase  in  the  rate  for  labor,  but  owing  to  the  troubles  on  the 
Isthmus  labor  was  less  efficient,  and  it  was  necessary  to  maintain  a 
a  larger  force  of  Fortune  Islanders  than  before.  Coal  and  other  sup- 
plies have  commanded  higher  prices  eveiy where. 

Maintenance  of  equipment. — The  total  charges  to  this  department  in 
1901  were  $116,519.83  as  against  $116,518.87  in  1900,  although  more 
tonnage  was  handled  than  in  the  latter  year. 

In  addition  to  ordinary  running  repairs,  three  of  the  older  loco- 
motives, which  had  been  laid  by  some  }Tears  ago,  have  been  com- 
pletely repaired  and  restored  to  service.  The  repairs  of  cars  have 
been  extensive;  38  flat  cars  have  been  converted  into  coal  cars  by  the 


« Paging  refers  to  Fifty-second  Annual  Report  of  the  Board  of  Directors  of  the 
Panama  Railroad  Company  for  1901. 


PANAMA  CANAL  TITLE, 


295 


addition  of  sides,  and  coal  ears  have  had  their  sides  raised  to 
increase  their  capacity:  4  flat  cars  were  fitted  with  20-ton  truck-. 

The  car  shop  has  received  new  tools,  as  follows:  A  patent  hand  saw- 
ing machine,  with  a  machine  for  filing  it;  an  Acme  bolt  cutter,  and  a 
self-feeding  ripsaw. 

M<ihitv)i<mee  of  'way  arid  structures. — The  track,  bridges,  and  build- 
ings have  been  maintained  at  a  high  standard,  the  expenditures  being 
$95,341.62,  a  decrease  of  $-408.98,  or  0.49  per  cent,  as  compared  with 
L900. 

There  have  been  laid  in  main  track  loo  tons  of  new  rails  of  r<> 
pounds  per  yard;  the  rails  thus  released  have  been  used  for  the  con- 
struction of  much-needed  sidings  at  Colon  and  Panama. 

The  repairs  of  masonry  have  been  continued,  the  abutments  and 
aprons  of  10  bridges  having  had  complete  repairs,  and  4  culverts  were 
rebuilt. 

At  Frijoles  a  battery  of  hydraulic  rams  has  been  installed,  dispens- 
ing with  the  steam  engine  and  pumper,  effecting  a  saving  of  $500  or 
more  per  annum. 

A  new  6-inch  water  main  from  the  reservoir  at  Mount  Hope  to  the 
railroad,  1,500  feet  in  length,  has  been  laid,  nearly  doubling  the  daily 
supply  available  at  Colon. 

The  car  shed  in  rear  of  the  old  passenger  station  at  Colon  has  been 
converted  into  a  storage  warehouse  for  freight. 

STEAMS  FT  IP  LINES. 

The  operating  expenses  of  the  line  between  New  York  and  Colon 
were  $868,009.64,  an  increase  of  13-1,293.22,  or  4.11  per  cent. 

On  December  16,  1900,  the  company  was  compelled  to  assume  the 
operating  of  a  steamship  line  between  Panama  and  San  Francisco  at 
an  unfavorable  time,  owing  to  the  scarcity  of  vessels  and  the  extremely 
high  cost  of  charters.  This  was  later  complicated  with  a  long-continued 
strike  at  San  Francisco.  During  the  latter  part  of  the  year,  after  the 
defeat  of  the  strikers  and  a  reduction  in  the  cost  of  charters,  the  line 
became  self-sustaining,  as  would  appear  in  the  accounts,  if  allowed 
the  proportions  previously  allotted  to  that  traffic.  The  importance  of 
this  line  is  indicated  by  the  amount  of  tonnage  carried,  which  was 
85,541  tons,  an  increase  21,362  tons  over  the  same  route  during  the 
previous  year.  The  total  amounted  to  19.26  per  cent  of  the  tonnage  of 
the  Atlantic  Steamship  line,  and  formed  22.1,8  percent  of  the  total 
carried  across  the  Isthmus. 

JOINT  RAILROAD  AND  STEAMSHIP  EXPENSES. 

The  combined  expenditures  under  this  head  amounted  to  $333,896.61, 
an  increase  of  $12,731.86,  or  3.96  per  cent. 

The  steamship  Bolivar  has  been  completely  overhauled,  receiving 
new  boilers,  pumps,  etc.,  from  New  York. 

Three  steel  launches,  built  at  Chester,  Pa.,  are  now  on  the  ways 
and  nearly  completed. 


296 


PANAMA  CANAL  TITLE. 


GENERAL  REMARKS. 

During  the  period  from  1894:  to  1901,  inclusive,  the  percentage  of 
total  expenses  to  gross  earnings  was  as  follows: 

Per  cent. 

1894   69.93 

1895   61.63 

1896   53.94 

1897,  including  taxes  and  appropriations  for  depreciation,  etc  61. 12 

1898,  including  taxes  and  appropriations  for  depreciation,  etc   64.91 

1899,  including  taxes  and  appropriations  for  depreciation,  etc   64.66 

1900,  including  taxes  and  appropriations  for  depreciation,  etc   65.  25 

1901: 

Including  taxes  and  appropriations  for  depreciation,  etc   64.72 

(Or  including  Pacific  Line,  not  operated  in  1900)   76.34 

It  is  gratifying  to  find  that  the  volume  of  traffie  has  been  more  than 
maintained,  showing  an  increase  over  last  year  of  28,207  tons,  in  spite 
of  the  embarrassments  under  which  all  operations  were  conducted,  by 
reason  of  the  political  disturbances,  which  occasionally  interrupted 
traffic,  caused  alarm  among  laborers,  added  to  the  cost  of  insuraneeof 
freight,  and  deterred  timid  passengers  from  taking  the  Isthmus  route 
for  fear  of  delay  or  injury. 

The  improvement  in  the  condition  of  the  company's  plant  upon  the 
Isthmus,  which  was  begun  several  years  ago,  has  been  continued  during 
the  year  11)01. 

Jt  became  necessary  to  supply  an  electric-light  plant  at  Colon  to 
supplement  the  deficient  supply  afforded  by  the  Colon  Illuminating 
Company,  which  was  put  into  use  very  successfully  at  the  beginning 
of  the  year;  in  connection  with  this  is  an  ice  machine,  made  necessary 
by  the  frequent  failures  of  the  supply  heretofore  received  from  Panama, 
which  promises  to  be  self-supporting. 

The  improved  condition  of  the  track  seemed  to  warrant  an  increase 
in  the  loads  carried  in  the  freight  cars;  therefore  the  maximum  load 
has  been  increased  from  10  tons  to  12.  This  was  equivalent  to  the 
addition  of  184:  ears  in  the  capacity  of  the  rolling  stock,  and  has  been 
of  much  benefit  to  the  service. 

The  steamships  owned  by  the  company  have  been  maintained  in 
complete  repair;  it  is  believed  that  none  of  its  property  has  depreciated. 

The  ship  ways  for  the  repair  and  construction  of  the  floating  equip- 
ment at  Panama  having  completely  decayed,  they  were  renewed  at  La 
Boca  under  a  shed  available  there,  in  connection  with  a  convenient 
shop  and  tools,  leased  from  the  New  Panama  Canal  Company,  and  the 
tools  and  shop  force  formerly  at  Panama  have  been  consolidated  with 
those  at  La  Boca.  At  this  establishment  a  large  amount  of  work  has 
been  done. 

The  dredges,  clapets,  etc.,  leased  from  the  canal  company  for  the 
maintenance  of  deep  water  at  La  Boca  have  been  very  extensively 
repaired;  the  general  overhauling  of  the  steamer  Bolivar  has  been 
completed;  the  three  new  launches,  mentioned  elsewhere,  are  now 
being  set  up.  In  addition,  the  repairs  of  the  transporters  on  the  piers 
and  repairs  of  foreign  steamships  were  made  at  the  new  La  Boca 
shops. 

In  Colon  the  ship  berths  at  Pier  No.  1  required  dredging,  to  accom- 
modate deeper  laden  coal  ships.    To  effect  this  the  plant  was  increased 


PANAMA  CANAL  TITLE. 


'2<>7 


by  the  purchase  of  a  new  "Hayward  orange-peel  bucket,"  which  will 
also  be  useful  in  the  future. 

Important  improvements  have  been  undertaken  and  partly  com- 
pleted upon  Pier  No.  2,  at  Colon,  whereby  an  additional  berth  for  the 
convenient  handling  of  coal  ships  has  been  gained,  and  the  long-dis- 
tance trucking  heretofore  necessary  there  will  be  avoided,  three  tracks 
connecting  with  the  main  line  having  been  laid  down  the  whole  length 
of  the  wharf. 

An  annex  for  the  reception  of  any  case  of  contagious  disease  has 
been  added  to  the  hospital  at  Colon. 

The  officers  and  employees  have  been  devoted  to  the  interests  of  the 
company.    Upon  the  Isthmus  they  have  had  to  encounter  the  dangers 
incident  to  a  state  of  war,  and  have  exhibited  courage  as  well  as  good 
judgment  in  their  dealings  with  the  contending  factions. 
Respectfully, 

Charles  Paine,  General  Manager. 


298 


PANAMA  CANAL  TITLE. 


Table  A. — Balance  xtieet. 


Cost  of  road,  real  estate,  and  equipment  

New  terminal  at  La  Boca  

Floating  equipment: 

Steamers  Allianca,  Finance,  and  Advance,  reduced  value  Dec.  31, 

1900  

Tugs  and  lighters,  reduced  value  Dec.  31, 1900  8345,995.13 

Deduct  depreciation  fund  for  tugs   2, 100. 00 


Total  

Bonds  in  Treasury: 

206  six  percent  Panama  Railroad  Company  sinking-fund  subsidy 

bonds  

897  four  and  a  half  per  cent  20-year  gold  sinking-fund  bonds  


On  deposit  with  financial  agents  for  redemption  of  bonds  (G  percent 

subsidy  bonds)  

Advance  of  subsidy  to  Republic  of  Colombia  

Improvement  and  construction  accounts  

Current  assets: 

Cash  in  banks  and  with  agents  

Coal  and  supplies  on  hand  

Due  from  connecting  companies  

Due  from  United  States  Government  

Due  from  companies  and  individuals  

Accrued  interest  on  deposits  

Accrued  interest  on  securities  owned  

Unadjusted  accounts,  including  purchase  of  leasehold  Pier  57,  N. 

R.,  until  1911  

Prepaid  insurance  and  charter  of  steamers  


8207,419.27 
343,895.13 


$11,941,186.66 


011,314.40 


200,  000. 00 
898,037.50  | 


434,  420.  22 
158, 548. 55 
112,229.01 
26, 671.87 
116,716. 136 
4,771.04 
2, 307. 50 

67, 829. 42 
20,  864. 28 


12,562,501.06 


1,104,037.50 

31,000.00 
1,202,000.00 
129,598  14 


944, 358. 25 


15, 963,  494.  95 


Table  13. — Profit  and  loss  account, 


To  one  hundred  and  thirteenth  dividend  

Operating  expenses   

Appropriations  for  depreciation  and  special  repairs  of  tugs 

Fixed  charges  

Supplies  of  no  value  written  off  

Uncollectible  accounts  written  off  

Balance,  assets  over  liabilities,  Dec.  31,  1901  


§140,000.00 
1, 435, 207. 24 
5, 100. 00 
496,811.61 
775. 45 
18,438.  78 
1, 110,  345.  00 


7, 206, 678. 08 


December  81  1901. 


PANAMA  CANAL  TITLE. 


299 


Capital  stock  

4£  per  cent  20-year  sinking-fund  gold  bonds  (authorized  Issue, 
$4,000,000): 

Issued  to  date  ('2,%-  bonds,  less  120  bonds  previously  redeemed ) . 
Less  drawn  for  redemption  in  11)01  


Total  capital  stock  and  mortgage  liabilities  

0  per  cent  gold  sinking-fund  subsidy  bonds «  

Due  contractors,  new  terminal  at  La  Boca  >>  

Bonds  drawn  tor  redemption  not  presented  for  payment,  0  per  cent 

subsidy  bonds  , 

Accrued  interest  on  bonds: 

i\  per  cent  JO  year  gold  bonds  (1,520  bonds)  

0  per  cent  subsidy  bonds  

Funds  for  redemption  of  bonds: 

-H  per  cent  20-year  gold  bonds  

(5  per  cent  subsidy  bonds  


Due  Republic  of  Colombia,  department  of  Panama  

Fund  for  replacement  of  boilers  and  special  repairs  to  tugs. 
<  Jurrent  liabilities: 

isthmus  drafts  not  presented  

Coupons  not  presented  

Audited  vouchers  

Unclaimed  dividends  

Due  deceased  or  missing  employees  


Balance  to  credit  of  profit  and  loss. 


82,542,000.00 
141, 000. 00 


17,107.50 
12,020.00 


02,248.11 
72, 915. 00 


20,987.43 
5, 042. 50 

52, 157. 99 
111.00 
2,213.27 


December  31,  1901. 


By  balance,  Dec.  31,  1900  

(iross  earnings  

4J  per  cent  20-year  sinking-fund  gold  bonds,  redeemed 
Accounts  of  previous  years  settled  


« 1,202  six  per  cent  gold  sinking  fund  subsidy  bonds  of  $1,000  each,  amounting  to  $1,202,000,  issued 
November  1,  1880,  fall  due  November  1,  1910. 

To  meet  this  bonded  indebtedness,  $225,000  annually  of  the  Colombian  Government  subsidy  was 
pledged  till  March  27,  1908,  the  same  to  be  applied  by  the  company,  first,  to  the  payment  of  the 
interest,  and  second,  as  accumulative  sinking  fund  for  the  redemption  of  the  principal:  the  bonds  to 
be  drawn  yearly  in  September  to  an  amount  equal  to  the  then  surjdus  of  the  subsidy  sinking  fund, 
the  drawn  bonds  to  be  paid  on  November  1,  after  each  drawing,  and  thereby  redeeming  the  whole 
issue  in  1908. 

''Of  this  amount  $871,000  will  become  due  in  1905,  and  is  secured  by  an  equivalent  amount  of  the 
company's  new  41  percent  bonds  as  collateral.  The  total  may  be  reduced  in  the  meantime  at  the 
option  of  the  company  by  payments  on  account. 


S.  Deming,  Treasurer. 


300 


PANAMA   CANAL  TITLE. 


Table  No.  1. — ('otnjxiralire  hI air, merit  of  operating  expenses  <>i  railroad  for  the  years 
ending  December  31,  1900  and  1901. 


O  EN  Kit  A  \i  EXPENSES  ON  THE  ISTHMUS. 

Advertising  

Cablegrams  

Hospital  service  

Legal  expenses  

Salaries  of  otticers  

Salaries  of  clerks  and  attendants  

OHice  expenses,  stationery,  and  printing  

other  expenses  

Total  

CONDUCTING  TRANSPORTATION. 

Advertising  

Clearing  wrecks  

Engineers  and  firemen  

Fuel  for  locomotives  

Injuries  to  persons  

Labor — Colon  and  Panama  stations  

Oil,  tallow,  waste,  and  other  supplies  for  locomotives  

Roundhouse  men  

Superintendence  and  clerks  

Switchmen,  yardmen,  and  yard  watchmen  

Station  agents  and  clerks  

Stal  i<>n  supplies  and  expenses  

Stationery  and  printing  

Train  conductors,  baggagemen,  flagmen,  and  hrakemen  .. 

Train  supplies  and  expenses  

Telegraph  expenses  

Water  supply  for  locomotives  

other  expenses  

Total  

MAINTENANCE  OF  EQUIPMENT. 

Repairs  of  freight  cars  

Repairs  of  locomotives  

Repairs  of  passenger  ears  

Repairs  and  renewals  of  shop  machinery  and  tools  

Superintendence  and  clerks  

Stationery  and  printing  

Total  

MAINTENANCE  OF  WAY  AND  STRUCTURES 

Repairs  of  bridges  and  culverts  

Repairs  and  renewal  of  general  offices  

Repairs  of  road  machinery  and  tools  

Repairs  of  roadway  and  tfack  

Renewals  of  switches  and  frogs  

Renewals  of  spikes  and  rail  fastenings  

Repairs  and  renewal  of  station  buildings  

Repairs  of  shop  buildings,  water  and  fuel  stations  

Repairs  of  section  houses,  tool  houses,  etc  

Renewal  of  ties  

Repairs  of  telegraph  

Removal  of  weeds,  brush,  grass,  etc  

Superintendence  and  clerks  

Stationery  and  printing  

Other  expenses  

Total  


1901. 


$8.21 
415.  33 
7, 570.  73 
2, 485.  74 
11,442. 40 

i2,r>  id.  oy 

2,408. 12 
3, 525. 58 


40, 378. 20 


1,288.04 
138.00 
29,170.58 
44,345.99 
749.  06 
120,354.20 
2, 779. 02 
8,211.3'.) 
4,352.13 
33,257.21 
05, 095. 42 
17,140.25 
3, 700. 24 
18,295.31 
3,310.25 
8,720.72 
3,529.13 
1,901.83 


373, 022.  88 


00, 200.15 
24,210. 10 
9, 490.  30 
10, 097.15 
12,230.32 
213.09 


110, 519. 83 


12, 493. 24 
1,300.30 
2, 317.  79 

19,920.  74 
1,140. 31 
3, 078.  09 

22, 139. 03 

14,028.64 
650.  22 
2,971.13 
2, 423. 20 
3, 934.  01 
8, 307. 27 
201. 13 
309.  80 


95, 341.62 


95, 810.  i 


PANAMA  CANAL  TITLE. 


301 


Table  No.  2.  —  (\nnparative  statement  of  expenses  of  steamsJiip  line,  Atlantic  serrire,  for 
years  ending  December  31,  1900  and  1001. 


Expanses. 


1901. 


STEAM  KK  EXPENSES. 

Port  charges: 

Custom-house  entrance,  clearance  and  consular  fees,  etc  . 

Pilotage  

Quarantine  

Total  

Docking  

Equipment,  deck,  engine, and  commmissarv  departments  

Fuel  

Feeding  passengers  and  crew  

Insurance  

Labor  on  cargo  

Labor  on  coal  

Labor  on  asbes  

Loss  and  damage  

Oil  and  waste  

Painting  ships'  bottoms  

Repairs,  deck,  engine,  and  commissary  departments  

Stores,  deck,  engine,  commissary,  and  surgeon's  departments 

Stationery  and  printing  

Telegrams  and  cables  

Towage  

Wages  

Water  

Washing  

Other  expenses  

Total  

AGENCY  EXPENSES. 

Advertising  

Insurance  

Labor  

Office  expenses  

Repairs  and  rent  of  offices  and  wharves  

Salaries  of  agents  and  clerks  

Stationery  and  printing  

Taxes  

Other  expenses  

Total  


$15,279.23 
7,351.88 
938.00 


23,  .569. 11 
1,103.  (38 

10,62*. 10 
111,450.11 

62,894.06 

22, 760. 53 
121,278.24 

14, 336. 98 
1,435.00 
6,038.14 
2,167.42 
1, 403. 00 

44,  70K.  31 

12, 462. 84 
875. 98 
1,205.  7S 
1,484.80 
130,331.36 

12,578. 43 
1,772. 11 
1,333.38 


585, 877. 45 


2, 669.  30 
1,759.21 
16, 645.  71 
5, 962. 49 
57, 388. 51 
29,298,  12 
1,443.80 
1,000. 03 
1,035.34 


117,202. 81 


Table  No.  3.  —  Comparative  statement  of  general  expenses,  New  York,  for  years  ending 
December  31,  1900  and  1901. 


Expenses. 


GENERAL  EXPENSES,  NEW  YORK. 

Advertising  

General  office  expenses  

Legal  services  and  expenses  

Salaries  of  general  officers  and  clerks  and  directors'  and  committees'  fees. 

Stationery  and  printing  

Telegrams  and  cablegrams  

Other  expenses  

Total  '.  


$1, 728. 59 
6,615.  74 
9, 149. 82 

70,271.60 
1,181.23 
1,620. 07 
1,074.93 


91, 641.  98 


302 


PANAMA  CANAL  TITLE. 


Table  No.  4. — Comparative  statement  of  expenses  of  steamship  line,  Pacific  sen  ice,  for 
years  ending  December  31,  1900  and  1901. 


Expenses. 


STEAMER  EXPENSES. 

Port  charges: 

Custom-house,  entrance,  elearanee,  consular  fees,  etc  ... 
Pilotage  

Total  

Equipment,  deck,  engine,  and  commissary  departments  

Fuel  

Feeding  passengers  and  crew  

Labor  on  cargo  

Labor  on  coal  

Labor  on  ashes  

Loss  and  damage  

Repairs,  deck,  engine,  and  commissary  departments  

Stores,  deck,  engine,  commissary, and  surgeon's  departments 

Stationery  and  printing  ."  

Telegrams  and  cables  

Towage  

Wages  

Water  

Other  expenses  

Total  

AGENCY  EXPENSES. 

Advertising  

Labor  

Office  expenses  

Repairs  and  rent  of  offices  and  wharves  

Salaries  of  agents  and  clerks  

Stationery  and  printing  

Taxes  

Other  expei.ses  

Total  


1901. 


$1,167. 21 
5, 645. 68 


6, 812.  89 
3.00 
99,  486. 83 
9, 576.  78 
68,  07:',.  95 
5, 953. 26 
27.50 
4, 853.  93 
16.  98 
2,211.27 
229.  30 
3s:,.  r>s 
472. 50 
2,981.85 
10.  031.  95 
175. 77 


211,8%.  34 


1,207.15 
9, 413. 85 
1,865. 03 
82,596.57 
15, 332. 88 
713.74 
3.25 
666.  VI 


111,798. 89 


Table  No.  5. — Number  of  tons  of  freight  moved  on  the  railroad. 
(1)  FROM  ALL  POINTS  TO  ALL  POINTS. 


1901. 

1900. 

Increase. 

Decrease. 

COLON  TO  PANAMA. 

From  New  York  to  San  Francisco  

Tons. 
43,455 

28,455 

61, 972 

27, 699 
34, 162 

Tons. 
33,555 

26,963 

54,905 

16,217 
22,118 

Per  cent. 
29.50 

5.53 

12.87 

70.  80 
54. 45 

Per  cent. 

From  New  Yorn.  to  Panama,  South  Pacific,  Central  America, 

From  Europe  to  Panama,  South  Pacific,  Central  America, 

From  Colon  to  Panama  (local): 

Commercial  freight  

Company's  freight  

Total  

195, 743 

153.758 

27.  31 

PANAMA  TO  COLON. 

42,086 

59, 651 

79,388 

2,883 
5, 833 

30, 624 

88,046 

77,219 

3, 198 
4,532 

37.  43 

From  South  Pacific,  Central  America,  Mexico,  and  Panama 
to  New  York  

32.26 

From  South  Pacific,  Central  America,  Mexico,  San  Francis- 

2.81 

From  Panama  to  Colon  (local): 

9.85 

28.71 

Total  

189, 841 

203, 619 

6.77 

Total  east  bound  and  west  bound  

385, 584 

357,377  |        7.89  j  

PANAMA  CANAL  TITLE. 


303 


Table  No.  5. — Number  of  tons  of  freight  moved  on  the  railroad — Continued. 

(2)  COUNTRIES  OF  ORIGIN  AND  DESTINATION. 


1901. 


1900. 


Increase.  Decrease. 


COLON  TO  PANAMA. 


For  Panama  

For  Central  America. 

For  South  Pacific  

For  San  Francisco  . . . 
For  Mexico  


Total. 


PANAMA  TO  COLON. 


From  Panama  

From  Central  America. 

From  South  Pacific  

From  San  Francisco  ... 
From  Mexico  


Total  

Total  east  bound  and  west  bound. 


Tons. 
71,151 
28, 252 
48,085 
45,  434 
2, 821 


195, 743 


25.  si  1 

40, 128 
80,318 
42,552 
1,029 


189,811 


Tons. 

47,3*1 
27.  109 

40, 936 
35, 374 
2,658 


Per  cent. 
50.17 

3.08 
17.46 
28.44 

6. 13 


Per  cent. 


153,758 


27.  31 


30,009 
48, 283 
93, 511 
30,  62S 
1.  INN 


38. 93 


203,619 


385,584  357,377 


13.  98 
16.89 
14.11 


13.38 


6.  77 


Table  No.  6. — Statement  showing  number  of  tons  of  freight  transported  during  the  years 
1897,  1898,  1899,  1900,  and  1901. 


Month. 

1897. 

1898. 

1899. 

1900. 

1901. 

Tons. 

Tons. 

Tons. 

Tons. 

Tons. 

January   

26,886 

23,708 

29,  204 

29, 115 

38, 264 

31,587 

29,993 

20, 883. 

30, 947 

32,909 

March  

32,539 

32, 234 

32,838 

33, 177 

34, 271 

April  

33, 978 

25, 899 

32,575 

33,381 

41, 159 

May  

30,420 

18, 007 

27,654 

29, 670 

36, 715 

June  

20, 962 

17, 108 

21,098 

25,236 

26, 8N9 

July  

20, 368 

16,906 

18, 827 

25, 982 

29,919 

August  

17,004 

18, 373 

17,  645 

22.415 

20, 5M 

September  

16, 929 

15, 816 

19,357 

27, 894 

35,  984 

October  

21,073 

22, 146 

19.N71 

29,320 

23,814 

19, 435 

22,581 

23,  305 

36, 754 

34,406 

December  

19,470 

25,385 

24, 143 

33,486 

30,  700 

Total  

290, 651 

268, 156 

287,  400 

357,  377 

385, 5S4 

304 


PANAMA   CANAL  TITLE. 


Table  No.  7. — Statement  showing  number  of  passengers  transported  during  the  yeafi 

1900  and  1901. 


1901. 


Month. 

To  Panama. 

To  Colon. 

r  irst 

class. 

Sen  Hid 

class. 

Total. 

1 1  est 
(•lass. 

Second 
class. 

Total. 

lanuarv 

232 

3,867 

4,099 

172 

3,633 

3,805 

February   

194 

3,535 

3,  729 

169 

3,510 

3, 679 

March  

175 

3,836 

4,011 

180 

3,  922 

4,102 

■122 

4,514 

4,736 

227 

4, 175 

4,402 

May  

203 

4,313 

4,516 

275 

3,852 

4,127 

June  

229 

3, 963 

4,192 

287 

4,387 

4,674 

July  

228 

3, 710 

3, 938 

204 

3, 605 

3,  809 

August  

155 

3,0*9 

3,244 

155 

3, 075 

3, 230 

September  

203 

2, 943 

3, 146 

167 

2, 845 

3, 012 

October  

212 

2, 731 

2, 943 

111 

2,  771 

2,882 

November  

215 

2,  976 

3, 191 

109 

2, 948 

3, 057 

December  

151 

3,090 

3,244 

109 

3,284 

3,393 

Total  

2, 422 

42, 567 

11,989 

2, 165 

42, 007 

41,172 

89, 161 


1900. 


January  

178 

2,284 

2, 462 

152 

2, 794 

2,946 

February   

260 

2,226 

2,  486 

26 1 

2, 736 

3,000 

March  

211 

3,025 

3, 236 

263 

3,354 

3, 617 

April  

269 

3, 224 

3,493 

117 

3, 538 

3, 985 

205 

2, 846 

3, 051 

420 

3, 091 

3,511 

June  

174 

3, 169 

3,343 

3, 183 

3, 430 

Julv  

186 

3,058 

3,244 

257 

3, 236 

3,493 

August  

185 

3,148 

3,333 

153 

3, 525 

3,678 

September  

200 

3, 250 

3, 450 

182 

3,060 

3, 242 

October  

256 

4,885 

5, 141 

211 

3, 167 

3,  408 

November  

272 

3, 670 

3, 942 

154 

3, 126 

3,280 

December  

279 

4,196 

4,475 

135 

3,851 

3,986 

Total  

2,  675 

38, 981 

41,656 

2, 915 

38,  661 

41,576 

83, 232 

Table  No.  8. — Comparative  statement  of  local  and  through  freight  transported  from  Colon 
to  Panama  during  the  years  1900  and  1901. 


Local  from  Colon 

Through  from 

Through  from 

to  Panama  ami 

Europt 

to  all 

New 

York  to 

Total. 

Month. 

way  stations. 

destinations. 

all  destinations. 

1901. 

1900. 

1901. 

1900. 

1901. 

1900. 

1901. 

1900. 

Tons. 

Tons. 

Tons. 

Tons. 

Tons. 

Tons. 

Tons. 

Tons. 

4, 918 

2, 221 

6,304 

6,178 

8,032 

5, 252 

19,254 

13,  651 

February   

3, 837 

4, 420 
3,689 

4,245 

3, 623 

5, 709 

2,788 

13, 971 

10, 831 

March  

4,803 

6,181 

3, 272 

6,685 

5, 362 

17,669 

12, 323 

8, 285 

7, 422 

5,352 

4,357 

8,577 

4,585 

22, 214 

16,364 

May  

4, 108 

2,256 

5,148 

3, 409 

6,274 

6, 210 

15, 530 

11,875 

June  

3, 033 

2, 292 

4,190 

4,184 

5, 547 

3,835 

12,770 

10,  311 

July  

2, 237 

1,766 

n,  574 

4,230 

6,516 

4,928 

14, 327 

10, 924 

August  

1,979 

2,035 

3, 896 

3,511 

4, 575 

3,890 

10, 450 

9,436 

September  

11,441 

2,319 

4,404 

4, 428 

4, 695 

4,642 

20, 540 

11,389 

October  

3,796 

1,296 

6, 132 

5,600 

5, 310 

5,601 

15, 238 

12, 497 

November  

6,653 

6,  521 

4,894 

5, 432 

5,281 

7,398 

16, 828 

19, 351 

December  

6,771 

2,  098 

5, 652 

6,681 

4, 709 

6,027 

17, 132 

14,806 

Total  

61, 861 

38,335 

61, 972 

54,905 

71,910 

60,  518 

195, 743 

153,  758 

PANAMA  CANAL  TITLE. 


305 


Table  No.  9. — Comparative  statement  of  local  and  through  freight  tram]  tor  ted  from 
Panama  to  Colon  during  the  years  1900  and  1901. 


Month. 

Local  from  Pana- 
ma to  Colon  and 
way  stations. 

Through  from  all 
points  to  Europe. 

Through  from  all 
points  to  New  York. 

Total. 

1901. 

1900. 

1901. 

1900. 

1901. 

1900. 

1901. 

1900. 

January   

February   

March  

April  

May  

June  

July  

August  

September  

October  

November  

December  

Total  

Tons. 
859 
685 
889 
1,169 
567 
489 
545 
571 
601 
733 
667 
941 

Tons. 
459 
847 
921 
1,100 
605 
681 
601 
591 
509 
486 
486 
444 

Tons. 

11,081 

9,504 
10,303 
9,974 
10, 242 
6,307 
3,489 
3, 381 
2,652 
4,322 
3,733 
4,400 

Tons. 
9  157 
L0,'207 
11,001 
9,433 
6,784 
4,761 
4,040 
3,484 
3, 460 
3,676 
3,257 
7,959 

Tons. 
7  070 
8^929 
5,410 
7,802 

10, 376 
7,323 

11,558 
6,152 

12, 191 
3,521 

13, 178 
8,227 

Inns. 
5  848 
9)  062 
8,932 

0,  |N1 

10, 406 
9, 483 
10,117 
8,904 
12, 536 
12,661 
13, 660 
10,277 

Tons. 
19  010 

19  JIM 

16,602 
18,945 
21,  185 
14,119 
15, 592 
10,104 
15,444 
8, 576 
17, 578 
13, 568 

Tons. 
15  464 
20l  116 
20, 854 
17,017 
17,795 
14,925 
15,058 
12,  979 
16,505 
16,823 
17,403 
18,680 

8,716 

7,730  79,388 

77,219 

101,737 

118,670 

189, 841 

203, 619 

Table  No.  10. — Statement  of  interest  and  exchange. 


Debits. 

1901. 

1900. 

Credits. 

1901. 

1900. 

Miscellaneous  interest 
and  exchange  items  

Loss  on  exchange— New 
York.  London,  and  1st  li- 
mns drafts  

Balance,  net  receipts  

$88.50 

2, 450. 32 
86,215.28 

895. 80 

Interest  on  deposits  with 
trust  companies  and 
London  bankers  

Interest    on   bonds  in 

$11,259.83 

14,350.00 

2,  982. 52 
412.  37 

$24,557.  74 

15, 876.25 

2, 242. 6-1 
2,111.09 

3, 047. 01 

47,738. 93 

Discount  on  prepayment 
of  sundry  accounts  

Miscellaneous  interest . . . 

Profit  on  exchange.  New 
York,  London  and  Isth- 
mus drafts  

Interest  on  advances  for 
construction  La  Boca 
terminal  

59, 749. 38 

88, 754. 10 

47, 834.  73 

88,  754. 10 

47,834.73 

Table  No.  1 1. — Statement  of  operating  expenses  of  railroad  (In)  months)  for  the  year  1901. 


January. 

Febru- 
ary. 

March. 

April.  May. 

June. 

July. 

General  expenses  on  Isthmus  . 

Conducting  transportation  

Maintenance  of  equipment ... 
Maintenance  of  way  and  struc- 
tures   

$2,954.98 
31,557.33 
9, 377. 05 

5,546.78 

83,210.11 
31,017.90 
9,  380.  90 

5, 035. 03 

$3, 344. 16 
31,554.11 
13,500.  34 

8, 308. 77 

$3,108.98  '$3,130.62 
31,941.68  35.163.51 
9.  150.  87   10.358.  If, 

6,119.86  11,428.28 

$3,554.98 
30, 829.  76 
11,254.50 

9,023. 49 

$3,660.25 
30, 106. 80 
14,059. 43 

7, 397. 09 

Total  



49, 436. 14 

48, 643. 94 

56.  707.  38 

50,321.39  60,080.87 

54, 062.  73 

56, 223.  57 

August. 

September. 

October. 

November. 

December. 

Total. 

General  expenses  on  Isthmus. 

Conducting  transportation  

Maintenance  of  equipment  ... 
Maintenance    of    way  and 

$3,888.91 
29, 246. 87 
11.458. 15 

10,524.99 

$3, 087. 20 
30, 509. 00 
11.  742.52 

5, 547. 89 

$3, 205.  73 
30, 669.  86 
9, 590.  26 

12,325.43 

83. 687. 86 
30, 580. 49 
a  4, 863. 69 

7,478. 45 

83,544.42 
•29, 445.  57 
11,511.04 

6,605.56 

840. 378. 20 
373, 022. 88 
116,519. 83 

95,341.62 

Total  

55,118.92 

50,  886.  61 

55,  791. 28 

37.  283. 11 

51,106.59 

625,  262.  53 

a  Credit. 

8751—02  20 


306 


PANAMA    CANAL  TITLE. 


Table  No.  12. — Statement  of  operating  expenses  of  lite  Panama  Railroad  Steamship  Line, 
At/antic  .nerrire  (by  months),  for  the  year  1901, 


January. 

February. 

March. 

April. 

May. 

$51,738.88 
11,642. 86 
13,  950.  00 

June. 

July. 

Steamer  expenses  

Agency  expenses  

Charter  of  Steamers  

Total  

$51,868.23 
9, 633. 83 
27,  .509.  38 

$43,  765.  84 
9,  422.  7:5 
12,600.00 

$43, 080. 89 
9,  268. 39 
13,950.00 

$57,600.41 
9, 807.  28 
13,500.00 

$43,541.58 
10, 9.56. 15 
11,150.00 

$-19, 078. 04 
9,079.15 
7, 300. 00 

89,011.44 

65, 788. 57 

66, 299. 28 

80,  907.  69 

77,231.74 

65, 647.  73 

65, 457. 19 

August. 

September. 

October. 

November. 

December. 

Total. 

Agency  expenses  

Charter  of  steamers  

Total  

$44. 193. 24 
9, 753. 81 
17,160.00 

$51,640.12 
8, 838.30 
8, 100.  00 

S43.216.64 
9, 585. 10 
7,800.00 

$46, 507. 18 
9,402.19 
17,200.00 

$51, 646. 40 
9, 913.02 
14,710.00 

$585, 877. 45 
117,202.81 
164, 929. 38 

71, 107.  05 

68, 57.H.  42 

65,601.74 

73, 109.  37 

79,269.42 

868, 009.  64 

Table  No.  13. — Statement  of  operatiny  expenses  of  the  Panama  Railroad  Steamxhip  Line, 
Pacific  service  Qyy  months),  for  the  year  1001. 


January. 

February. 

March. 

April. 

May. 

June. 

July.- 

Steamer  expenses  

Agency  expenses  

Charter  of  steamers  

(20,159. 13 
6.9S5. 12 
19, 600. 00 

$19,415.  45 
11,136.39 
28, 000. 00 

520.  s7.s.  37 
8, 926. 81 
31,000.00 

$20, 560.  88 
11,062.14 
31,251.00 

$15,153.33 
6,710. 84 
21.033.33 

$16,996.63 
12. 158.41 
17,250.00 

$13,172.48 
7, 557. 91 
17,825.00 

Total  

46,  744. 25 

58,551.84 

60,  805. 18 

62,  874. 02 

42, 897. 50 

46, 405. 04 

38, 555. 39 

August. 

September. 

October. 

November. 

December. 

Total. 

Agency  expenses  

Charter  of  steamers  

Total  

$18,951.66 
6,734.90 
23, 450.  00 

$14,437.17 
14,170.35 
18,375.00 

$24, 636. 37 
6.828.8X 
31,100.00 

$17,406.42 
16,529.24 
22,9.50.00 

$14, 809.  32 
2,997.90 
17,825.00 

$216,5X0.21 
111,798. 89 
279, 659. 33 

49, 139. 56 

46, 982.  52 

62, 565. 25 

56, 885. 66 

35, 632.  22 

608,  038. 43 

Table  No.  14. — Statement  of  earnings  of  railroad  (by  months)  for  the  year  1901. 


January. 

Febru- 
ary. 

March. 

April.  May 

June. 

July. 

Freight,  Colon  to  Panama  

Freight,  Panama  to  Colon  

Passengers,  Colon  to  Panama.. 
Passengers,  Panama  to  Colon.. 

Mails.  Colon  to  Panama  

Mails,  Panama  to  Colon  

$58, 742.  64 
65. 965. 77 
3, 659.  75 
2,  720.  77 
4, 404. 48 
517. 14 
628. 89 
1,257.28 

796. 44 

506. 40 

$41,907.31 
63.  792.  77 
2, 920  29 
2,629.22 
3, 800. 05 
391.12 
424. 05 
1,150.  72 

537.34 

604. 17 

$51, 109.  80  $60, 382. 97  $46,  728. 24 
60,819.67  60,893.13  67,587.31 
2,978.49    3,533.29  4,959.05 
2,869.16    3,481.59  3,825.18 
4,577.59    4,298.32;  4,193.35 
333.01       415.41|  340.53 
338.  72       350. 16       358. 22 
1,580.15    1,122.48  1,266.34 

525.81    1,055.46  830.50 

545. 36       557. 85       910. 40 

$-41,066.38 
42,111.34 
3, 209.  63 
4,371.16 
4,191.55 
418. 09 
167.18 
1,199.78 

1,054.60 

751. 11 

$50, 939. 19 
42, 522. 62 
3, 360. 57 
3, 448.23 
5,210.85 
362. 72 
314.13 
869. 98 

872.49 

799.08 

Treasure,  Colon  to  Panama  

Treasure,  Panama  to  Colon  

Extra  baggage,  Colon  to  Pan- 
ama   

Extra  baggage,  Panama  to 
Colon  

Total  

139, 199.  56 

118,157.04 

125,  677.  76  136, 090.  66  130, 999. 12 

98,  -540. 82 

108,  699. 86 

August. 

September.  October. 

November. 

December. 

Total. 

Freight,  Colon  to  Panama  

Freight,  Panama  to  Colon  

Passengers,  Colon  to  Panama.. 
Passengers,  Panama  to  Colon.. 

Mails,  ( Jolon  to  Panama  

Mails.  Panama  to  Colon  

Treasure,  Colon  to  Panama  

Treasure,  Panama  to  Colon  

Extra  baggage,  Colon  to  Pan- 
ama  

Extra  baggage,   Panama  to 

Total  

$36,491.97 
29, 237.  92 
2,  613.  21 
2, 504.  78 
3,918.79 
322. 29 
205. 45 
1,473.45 

407. 60 

584.02 

$58,673.49  $51,265.39 
39, 287.  97      27, 582. 42 
2, 832. 05       2, 936. 68 
2,741.51  2,362.49 
3,  776.  64       4, 676. 47 
514.  22          430. 13 
217. 81 !  319.63 
1,611.28  1,047.23 

1,119.90  -817.14 

1 

598. 65          538. 63 

$54,176.09 
50, 909.  84 
3, 608. 09 
2, 630.  66 
4,463.85 
335.64 
321.83 
964.36 

1,060. 27 

474.  94 

$-54,  702. 18 
39, 853. 31 
2, 625.  71 
2, 833. 12 
4,742. 14 
400. 17 
,506.  70 
791.02 

617. 85 

589.76 

$000, 185. 65 
590, 624. 07 
39, 236. 81 
36,417.87 
52,254.08 
4,  780. 47 
4,182. 77 
14,334.07 

9,  695. 40 

7, 460. 37 

77,  759. 48 

111,373.52      92,000.21  119,005.57 

107,601.90 

1,305,171.50 

PANAMA  CANAL  TITLE. 


307 


Tahlk  No.  15. 


•Statement  of  earnings  of  the  Panama  Railroad  Steamship  Line,  Atlantic 
service  (t>y  months),  for  the  year  1901. 


Krt  ij-lit  

Treasure  

Mails  

Extra  baggage 

Passengers  

Miscellaneous . 


January, 


Febru- 
ary. 


$62,091.  18 
602.  62 
7,381.14 
113.-181 
12, 609. 10: 
530. 83l 


$49, 633. 01 
433.55 
5,  769.  87 
161.15 
9,  -297.  65 
409. 69 


Total   83,828.85  65, 


March. 


April. 


May. 


June. 


July. 


S-V..  s:,7.  :>2  >7  I,  111. '_'()  >60.  9  16.  37  $62.  306.  88  $61 . 

430.38|  873/28!  209.42  358. 48| 
6,340.50    7,405.45]    5,916.67    6,0*8.39  7. 

144.17  159.35'  192.75  179.11 
8, 601 .  59  1 5,  133.  3!   14, 06:}.  89  1 5,  181 .  82  18, 

490.67       80-2.54        7X5.21  639.50 


s'.is.  5<j 
340.  28 
717.35 
220.  79 
222.  72 

9i:;.28 


;   «2  72,864.63  99.0H8.16  82,114.31  84, 


754.18  89,313.01 


August. 

September.  October. 

November. 

Ik-ceinbcr. 

Total. 

Freight  

Extra  baggage  

Total  

$63,596.22 
278.  19 
5,  898.  86 
137.  23 
12, 178. 35 
497.80 

$40, 827. 94 
371. 19 
5,441.73 
220.  65 
10, 984.  76 
516.  45 

$60, 042. 80 
590.  79 
7, 322. 61 
171.07 
14,202.25 
532.  78 

$58,234.10 
197.06 
6,046.36 
276.21 
13,694.18 
608. 20 

$67, 759. 27 
266. 41 
7,686.90 
210. 73 
10,101.93 
790.26 

S71s.607.S8 
4,951.65 
79, 015.83 
2, 186. 69 
15-1,571.58 
7,517.21 

82, 586. 65(     58, 362. 72!     82, 862. 30 

79,0.56.11 

86,815.50j  966,850.84 

Table  No.  16. — Statement  of  earnings  of  the  Panama  Railroad  Steamship  Line,  Pacific 
service  (by  months),  for  the  year  1901. 


January. 

Febru- 
ary. 

March. 

April,    j  May. 

June. 

July. 

Freight  

Passengers  

Total  

$18, 476.00 
2.45 
1,527.50 

$21,293. 39 
31.24 
1,400.00 

$45, 452. 00 
5.55 
1,615.00 

1 

$18, 771. 00  $28,  610. 28  $37, 557. 80 
9.55        13.75  1.35 
2,152.75    1,070.00  1,837.50 

$13,857. 42 
2.25 
1,080.00 

20. 005.  95 

22,  724.  63 

47,072.55  20,933.30  29.694.03  39. 396. 6-5  14.939.67 

August. 

September. 

October. 

November. 

December. 

Total. 

Freight  

141,427.72 
9.25 
875. 00 


$20, 562. 72 
7.35 
1,2-50.00 

$53, 575. 12 
25.29 
1,495.00 

$11,513.-55 
12. 15 
602. 50 

$38,180. 33 

$319, 277.33 
120. 18 
16, 425. 25 

Extra  baggage  

Passengers  

1,520.00 

Total  

42, 311.  97 

21,820.07 

55, 095. 41 

12, 128.  20 

39.  700.  33 

365, 822.  76 

Table  No.  17. — Comparative  statement  of  vessel  entries  during  the  years  1900  and  1901, 

Colon  Harbor. 


Month. 

Sailing  vessels. 

Steamers. 

Total. 

1901. 

1900. 

1901. 

1900. 

1901. 

1900. 

No. 

Tons. 

No. 

Tons. 

No. 

Tons. 

No. 

Tons. 

No. 

Tons. 

No. 

Tons. 

January  

27 

1,014 

.56 

1,113 

38 

97,  .545 

31 

88, 137 

65 

98,559 

87 

89,250 

February  ... 

28 

948 

42 

965 

25 

50, 755 

29 

89, 692 

53 

51,703 

71 

90,657 

March 

36 

402 

43 

689 

33 

100,658 

33 

95, 693 

69 

101,060 

76 

96,  :;>2 

April  

42 

1,117 

50 

696 

33 

104, 961 

31 

90,940 

75 

106, 081 

81 

91,636 

May  

34 

570 

51 

652 

33 

93, 403 

31 

89, 849 

67 

93, 973 

85 

90,-501 

June  

42 

618 

50 

1,422 

27 

76,  705 

28 

73, 144 

69 

77, 323 

78 

74,566 

July  

34 

484 

34 

615 

32 

93,314 

31 

95, 466 

66 

93, 798 

65 

96, 081 

August  

33 

313 

36 

721 

27 

71,759 

28 

72,035 

60 

72,072 

61 

72, 756 

September  . . 

33 

617 

39 

1,119 

29 

77.814 

27 

74,618 

62 

78.461 

66 

75,  737 

October 

34 

726 

46 

630 

31 

95,  757 

29 

80, 462 

65 

96, 483 

75 

81,092 

November  .. 

28 

971 

54 

1,461 

35 

87,276 

28 

78, 715 

63 

88, 247 

82 

80,176 

December... 

27 

700 

39 

532 

30 

100,680 

29 

84,384 

101,380 

68 

84,916 

Total.. 

39S 

8,  510 

543 

10,  615 

373 

1,050,630 

355 

1,013.135 

m 

1,059,140  898 

1,023.750 

PANAMA  CANAL  TITLE. 


Table  No.  18. — Comparative  statement  of  resgel  entries  during  the  years  1900  and  1901, 

port  of  Panama. 


Month. 

Steamers. 

Total. 

1901. 

1900. 

1901. 

1900. 

No. 

Tons. 

No. 

Tons. 

No. 

Tons. 

No. 

Tons. 

17 

26,588 

20 

28, 486 

17 

26, 588 

20 

26, 486 

February  

18 

27,683 

22 

81 . 544 

18 

27, 683 

22 

31,544 

20 

28, 223 

21 

33,633 

20 

28, 223 

21 

33,633 

17 

26, 157 

19 

26, 179 

17 

26,157 

19 

26, 179 

May  

20 

27,481 

17 

26, 476 

20 

27,481 

17 

26,  176 

16 

20,391 

19 

23, 738 

16 

20, 391 

19 

23, 788 

July  

17 

23,687 

15 

23, 594 

17 

28, 687 

15 

23,  594 

18 

22, 215 

14 

18,  378 

18 

22,215 

14 

18, 378 

September  

21 

27, 673 

18 

26, 673 

21 

27,673 

18 

26, 673 

October  

17 

23, 475 

21 

30, 840 

17 

23, 475 

21 

:;o.sio 

November  

19 

27,038 

19 

29, 103 

19 

27, 03* 

19 

29, 103 

16 

21,899 

21 

29, 198 

16 

21,899 

21 

29, 198 

Total  

216 

302,510 

226 

327, 842 

216 

302,  510 

226 

327, 842 

Table  No.  19. — Rolling  slock  equipment. 


Locomo- 
tives. 

Passenger  cars. 

Freight  cars. 

Miscellaneous. 

m 

'Ex 
p 

c 

« 

Switch  engines. 

Special. 

First  class. 

Composite,  first  and 
second  classes. 

aJ 
"o 

a 

: 

c? 
a> 

CO 

a3 
bo 
2s 

s° 

be 

aJ 

Box. 

Coal. 

Flat. 

« 

z. 

X 

V 

"3 

1 

Caboose. 

|  Specie. 

Water. 

M 

o 

5 

CO 

B 

u 

- 

0) 

■O 
•d 

r. 
O 
« 

Movable  steam  crane. 

Steam  pile  driver. 

Stock  on  Dec.  31,1901. 
Stock  on  Dec.  31,1900. 

Decrease  during 

24 
24 

11 
11 

5 
5 

8 
8 

2 
2 

9 
9 

7 
7 

582 
582 

136 
136 

186 
186 

27 
27 

1 
1 

5 
5 

2 
2 

9 
9 

9 
9 

2 
2 

.... 

1 
1 

1 

Table  No.  20. — Floating  equipment. 


Name. 


Steamship  Allianca  . 
Steamship  Advance  . 
Steamship  Finance.. 

Tug  Ancon  

Tug  Bolivar  

4  freight  lighters  

14  freight  lighters  ... 

2  coal  lighters  

1  floating  pile  driver 


Gross  ton- 
nage. 


2,985 
2,605 
2, 603 
105 
234 
340 

230  to  300 
215 


Length. 


Feet. 
303 
295 
300 

98 
127 
110 
110 
100 

60 


Breadth. 


Ft.  In. 
42  0 
38 
38 
18 
23 
24 
24 
24 


Depth. 


Ft.  In 
23  ! 

23 
23 


Hull. 


30  0 


Iron  . . 
....do 
....do, 

 do, 

 do, 

Steel.. 
Iron  . . , 

 do 

Wood., 


Passenger  accom- 
modation. 


Cabin. 


Steerage. 


PANAMA  CANAL  TITLE. 


309 


EXHIBIT  T. 

OFFICIAL  PROPOSAL  OF  SALE  TO  THE  UNITED  STATES. 

New  Panama  Canal  Company,  Anonymous  Association,  Capital  65  millions; 
Company  Headquarters  7  Rue  Louis-le-Grand. 

Taken  from  the  record  of  the  deliberations  of  the  council  of  admin- 
Lsl  ration. 
Session  of  January  9,  1902. 
Present:    MM.  Bo,  president, 

Monvoisin,  vice-president, 

Terrier,  vice-president, 

Bourgeois,  administrator, 

Couvreux,  administrator, 

Forot,  administrator, 

Gueydan,  administrator, 

Le  Baron  de  Lassus  St.  Genies,  administrator, 
Georges  Martin,  administrator. 

The  council  decides  unanimously  to  make  an  offer  at  a  fixed  price 
for  the  cession  to  the  Government  of  the  United  States  of  all  the  prop- 
erties and  rights  which  the  New  Company  possesses  on  the  Isthmus, 
without  any  exception,  for  '$40,000,000,  and  it  delegates  to  its  presi- 
dent, M.  Bo,  all  powers  to  transmit  that  offer,  and  effect  and  sign  the 
said  cession. 

Copy  conforming  with  the  original. 

M.  Bo, 

President  of  the  Council  of  Administration. 


Telegram  Addressed  to  Admiral  Walker,  January  9,  1902. 

The  New  Panama  Canal  Company  declares  that  it  is  ready  to  accept 
for  the  whole  of  its  properties  and  rights  on  the  isthmus,  without 
exception,  the  sum  of  $40,000,000.  This  offer  good  up  to  March  4, 1903. 

Bo, 

President  of  the  Council  of  Administration. 
Certified  to  be  in  conformity  with  the  original. 

Bo, 

President  of  the  Council  of  Ad/ministration. 


Telegram  Addressed  to  Admiral  Walker,  January  11,  1902. 

The  offer  of  cession  of  all  our  properties  comprises  also  all  plans  and 
archives  at  Paris. 

Bo, 

President  of  the  Council  of  Administration . 
Certified  to  be  in  conformity  with  the  original. 

Bo, 

President  of  the  Council  of  Administration. 

New  Panama  Canal  Company,  Anonymous  Association,  Capital  65  Millions; 
Company  Headquarters  7,  rue  Louis-le-Grand. 

Taken  from  the  report  of  the  ordinary  general  meeting  of  stock 
holders  of  the  New  Panama  Canal  Company,  held  December  21,  1901, 
in  the  hall  of  the  Association  of  Agriculturists  of  France,  8  rue 
d'Athenes,  Paris. 


310 


PANAMA  CANAL  TITLE. 


Saturday,  December  21,  1901,  at  2.30  p,  m. 

The  stockholders  of  the  New  Panama  Canal  Company,  an  anonymous 
association,  with  a  capital  of  65,000,000  francs,  having  its  headquarters 
at  Paris,  7  rue  Louis-le-Grand, 

Having  met  in  ordinary  general  assembly  at  Paris,  in  the  hall  of  the 
Association  of  Agriculturists  of  France,  8  rue  d'Athenes,  in  conse- 
quence of  a  call  inserted  in  the  general  journal  of  announcements,  issue, 
of  Friday,  November  29, 1901,  called  "  Little  Announcements  "  (Petites 
Affiches),  M.  Bo,  vice-president  of  the  company,  presiding, 

The  president  announces  that  the  roll  of  those  present,  signed  by 
each  stockholder  upon  entering,  shows  the  presence  of  227  stockhold- 
ers, representing  either  for  themselves  or  as  proxies  592.304  shares, 
giving  a  right  to  7,523  votes,  to  wit,  more  than  half  of  the  company 
capital;  that  in  consequence  the  meeting,  being  legally  constituted,  can 
validly  deli  be  rate. 

He  places  upon  the  table  the  stamped  copy,  recorded  and  authenti- 
cated, of  the  number  of  the  Petites  Affiches  of  November  29  aforesaid. 

Afterwards  the  president  invites  to  assist  him  two  of  the  principal 
stockholders  present: 

M.  Jean  Pierre  Gautron,  judicial  administrator,  in  the  name  of  and 
as  liquidator  of  the  Universal  Company  of  the  Interoceanic  Canal  of 
Panama,  having  headquarters  at  Paris.  42  Kuede  la  Chaussee  d'Antin; 
and  M.  Uribe,  residing  at  Paris,  12  Rue  de  Bassano, consul-general  of 
the  Republic  of  Colombia,  specially  accredited  to  represent  his  Gov- 
ernment at  the  meeting, 

The  liquidation  of  the  Universal  Company  of  the  Interoceanic  Canal 
of  Panama,  being  owner  of  158,655  shares,  and  the  Government  of  the 
Republic  of  Colombia  of  50,000  shares. 

MM.  Gautron  and  Uribe  accept  the  functions  of  examiners  and  take 
their  places  at  the  table. 

The  president  and  examiners  designate  as  secretary  of  the  meeting, 
M.  Edouard  Lampre,  residing  at  Paris,  39  Boulevard  Berthier,  who 
accepts. 

The  bureau  being  thus  constituted,  certifies  the  list  of  those  present. 

#  •*  *  *  *  *  * 


The  general  meeting,  after  having  heard  the  report  of  its  council  of 
administration,  approves  the  conclusions  of  that  report  and  gives  all 
powers  to  its  council  of  administration  to  negotiate  the  cession  of  the 
properties,  concessions,  privileges,  etc.,  of  the  compan}T,  and  to  con- 
tract, with  the  reservation  of  ratification  by  the  stockholders. 

This  resolution  is  adopted  almost  unanimously. 


SECOND  RESOLUTION. 


PANAMA    CANAL  TITLE. 


811 


New  Panama  Canal  Company,  Anonymous  Association;  Capital,  <)5  Millions; 
Company  Headquarters,  7  Rue  Louis-le-Grand. 

Taken  from  the  report  of  the  ordinary  general  meeting  of  stock- 
holders of  the  New  Panama  Canal  Company,  held  December  21, 
L901,  in  the  hall  of  the  Association  of  Agriculturists  of  France,  8  Rue 
d'Athenes,  Paris. 

Saturday,  December  21,  L901,  at  2.30  p.  m. 

*  ****** 

THIRD  RESOLUTION. 

The  general  meeting  ratifies  the  nominations  of  administrators  made 
by  the  council  of  administration  in  pursuance  of  article  23  of  the 
by-laws,  of  M.  Rischmann  to  replace  M.  Rouget,  of  M.  Forot  to  replace 
M.  Hutin,  and  of  M.  Bourgois  to  replace  M.  Choron.  It  appoints, 
besides,  M.  Gueydan  as  administrator,  who  will  make  the  tenth  admin- 
istrator, and  decides,  in  conformity  with  article  22  of  the  by-laws,  that 
four  administrators  instead  of  three  shall  be  designated  before  the  next 
general  annual  meeting,  which  will  vote  to  replace  or  reelect  them. 

This  resolution  is  adopted  almost  unanimously. 

*  *  *  *  *  *  * 

The  order  of  the  day  being  accomplished,  the  session  adjourns  at 
4  o'clock. 

The  faith  of  which  there  has  been  drawn  up  the  present  report, 
which  is  signed  by  the  members  of  the  bureau  to  serve  and  value  as  it 
lawfully  mav. 

M.  Bo, 

The  President. 

P.  Gautron,  Jose  Pablo  Uribe, 

An  Examiner.  An  Examiner. 

Ed.  Lampre, 
The  Secretary. 

Certified  to  be  in  conformity  with  the  original. 

M.  Bo, 

President  of  the  Council  of  Administration. 


EXHIBIT  U. 

OPINION  BY  MilTRE  DU  BUIT  AS  TO  JUDGMENT  CREDITORS  OF  THE 
COMPAGNIE  UNIVERSELLE. 

According  to  French  law  judgments,  even  for  liquidated  sums, 
obtained  against  a  debtor,  do  not  in  themselves  confer  upon  the  cred- 
itor any  right  of  preference  or  right  to  follow  the  property  of  the 
debtor. 

These  judgments  carry  with  them  a  judicial  lien  upon  all  real  estate 
(art.  2123  of  the  Civil  Code);  that  is  to  say,  they  confer  upon  the 
creditor  who  obtained  them  the  right  to  obtain  a  lien  by  an  entry  on 
the  registers  of  liens  of  the  place  where  the  property  is  situated  (art. 
2134),  but  the  lien  affects  the  property  only  by  virtue  of  the  entry. 
Unless  the  claim  sanctioned  by  the  judgment  is  in  its  nature  a  claim 
preferred  as  to  certain  property  or  as  to  all  property,  the  creditor  can 


312 


PANAMA  CANAL  TITLE. 


not  obtain  from  the  judgment  or  from  the  date  of  its  entry  any  prior- 
ity over  claims,  whether  supported  by  executory  instruments  (judg- 
ments or  notarial  deeds)  or  not,  whatever  may  be  their  earlier  or  later 
date.    (Arts.  2093  and  2094.) 

The  existence  of  these  judgments  does  not  affect  in  any  way  the 
right  of  disposition,  which  continues  to  belong  to  the  debtor;  all  aliena- 
tions not  made  in  fraud  of  creditors,  are,  therefore,  valid,  and  transfer 
title  to  the  purchasers  (art.  1167),  subject  to  the  right  of  redemption 
in  the  case  of  conveyances  of  real  estate. 

The  only  effect  of  judgments  is  to  allow  the  creditor  who  had  no 
executory  instrument,  but  only  a  private  right,  to  levy  upon  and  have 
sold,  the  property,  personal  and  real,  belonging  to  his  debtor  (art.  545, 
Code  of  Procedure,  583,  673);  but  this  right,  even  when  exercised, 
does  not  confer  upon  him  any  right  of  preference  in  the  proceeds  of 
the  sale  of  the  personal  or  real  property  upon  which  he  has  levied,  and 
which  he  has  had  sold  (arts.  2093,  2094,  (  nil  (ode).  All  other  credit- 
ors of  the  same  debtor,  whether  they  hold  executory  instruments  or 
not  (art.  009,  Code  of  Procedure),  have  the  right  to  come  in  to  share 
in  the  proceeds  of  sales  made  at  the  instance  of  the  most  diligent.  It 
may  even  happen  that  in  the  distributions  (art.  656  et  seq.  of  the  Code 
of  Procedure)  or  in  the  orders  (these  latter  arc  open,  as  to  the  price  of 
real  estate)  (art.  749  et  seq.  of  the  Code  of  Procedure)  which  the  court 
may  make  for  the  distribution  of  the  price,  the  creditor  making  the 
levy  may  find  himself  confronted  by  creditors  having  a  right  to  pri- 
ority, and  that  he  may  he  reduced,  after  the  deductions  made  for  them, 
to  receiving  only  an  insignificant  share. 

It  will  be  seen,  therefore,  that  the  act  of  1893  might,  without  vio- 
lating any  rule,  and  without  disregarding  any  vested  right,  provide 
that  the  creditors  (not  mortgage  creditors,  moreover)  of  the  Com- 
pagnie Universelle  de  Panama,  which  owned  no  real  estate  in  France, 
should  not  have  the  right  to  enforce,  themselves,  judgments  which  they 
might  have  obtained  before  the  promulgation  of  the  act.  In  fact, 
these  judgments  would  not  have  given,  even  in  case  they  had  enforced 
them  by  levy  and  judicial  sale  of  certain  property,  any  exclusive  or 
preferential  right  to  the  proceeds  of  these  sales.  These  partial  execu- 
tions could  only  cause  the  most  serious  inconvenience,  in  that  they 
would  have  paralyzed  the  liquidator,  who  alone  could  have  made  any- 
thing out  of  the  principal  asset,  the  canal  concession;  a  levy  upon 
and  sale  of  this  concession  in  the  ordinary  wa}r  would,  moreover — it 
might  be  feared,  at  least—  destro}7  the  value  of  the  concession.  Such 
is  the  purpose  of  the  act  of  1893  on  this  point.  It  deprives  none  of 
the  creditors  of  the  only  right  which  French  law  recognizes  in  him, 
that  of  receiving  his  proportionate  share  of  the  assets  of  his  debtor, 
the  Compagnie  Universelle.    (Art.  2123  of  the  Civil  Code.) 

The  Government  of  the  United  States,  therefore,  in  case  it  should 
become  the  purchaser  of  the  concession,  would  in  no  way  have  to  con- 
cern itself  with  the  creditors  of  the  Compagnie  Universelle,  who  had 
obtained  judgments  against  it  before  the  promulgation  of  the  act. 
It  has,  moreover,  been  explained  in  the  opinion  that  all  rights  of  cred- 
itors of  the  Compagnie  Universelle  as  to  the  concession  and  the  rest  of 
the  assets  of  that  company  have  been  cleared  away,  so  far  as  concerns 
the  New  Company  and  third  parties  who  may  become  purchasers  from 
it  in  future.  (See  art.  609,  Code  of  Procedure:  "Creditors  can  not 
intervene  except  upon  the  price  of  sale.")    The  rights  of  creditors, 


PANAMA  CANAL  TITLE. 


313 


whatever  they  may  be,  have  been  transferred  to  the  price  of  the 
sale  made  by  the  liquidator,  in  the  form  of  a  contribution  to  the 
company,  so  that  third  parties  have  nothing  to  do  with  any  diffi- 
culties and  competitions  which  may  arise  between  creditors  and  the 
liquidator.  If,  contrary  to  the  tact,  it  were  even  supposed  that 
the  holders  of  judgments  against  the  Compagnie  Universelle  have 
thereby  gained  a  better  situation  than  that  of  the  other  bondholders 
or  creditors,  and  would  have  a  right  to  payment  in  full,  this  would 
still  be  only  a  right  of  preference  in  tht  price,  and  not  a  right  to  fol- 
low, affecting  any  part  of  the  assets  of  the  old  Compagnie  Qniverselle, 
as  against  outside  purchasers.  The  question,  which  is  wholly  internal, 
would  have  no  importance  to  third  parties,  especially  to  the  Govern- 
ment of  the  United  States,  which  would  never  have  anything  to  fear 
from  them. 

Given  at  Paris,  September  15,  1902. 

(Signed)  H.  Du  Burr. 


exhibit  v. 

OPINION  OF  ME.  WALDECK-ROUSSEAU,  ADVOCATE  OF  THE  COURT  OF 
APPEALS  OF  PARIS,  ON  THE  TITLE  OF  THE  NEW  PANAMA  CANAL 
COMPANY  TO  ITS  CONCESSIONS  AND  OTHER  PROPERTY  AND  ITS 
POWER  TO  CONVEY  A  CLEAR  TITLE  TO  THE  UNITED  STATES. 

The  questions  submitted  to  the  counsel  undersigned  are  contained  in 
-  a  letter  dated  September  6,  1902,  and  are  formulated  as  follows: 

I.  lias  the  New  Panama  Canal  Company  a  certain  and  absolute  title  to  the  prop- 
erty which  it  has  offered  for  sale  to  the  Government  of  the  United  States? 

II.  Is  this  property  in  any  measure  legally  encumbered  by  the  debts  and  liabili- 
ties of  the  old  company?  In  the  event  of  the  United  States  purchasing  this  property, 
would  they,  by  so  doing,  become  responsible  for  such  debts  and  liabilities  and  would 
they  thereby  assume  any  kind  of  obligation  to  the  shareholders,  bondholders,  or 
other  creditors  of  the  old  company? 

III.  Is  the  act  of  July  1,  1893,  unimpeachable  and  absolute,  according  to  the 
Constitution  and  according  to  French  law?  Have  the  French  judicial  authorities 
power  to  discuss  the  validity  of  said  act? 

IV.  Is  the  New  Panama  Canal  Company  in  any  measure  a  govern- 
ment corporation  in  France,  and  is  the  cooperation  of  the  French 
Government  necessary  for  the  transfer  which  the  New  Panama  Canal 
Company  proposes  making  to  the  Government  of  the  United  States? 

V.  Will  the  proposed  transfer,  duly  carried  out  by  deed  of  the  New 
Panama  Canal  Company,  and  by  deed  of  the  liquidators  of  said  com- 
pany, the  dissolution  of  which  would  be  declared,  place  in  the  hands 
of  the  United  States  an  absolute  and  unconditional  title  to  the  trans- 
ferred propert}T,  without  the  United  States  assuming  any  of  the  obli- 
gations of  the  old  company  to  the  shareholders,  bondholders,  and 
other  creditors  of  said  compan}T  ? 

Of  course,  the  New  Panama  Canal  Company,  having  made  the  transfer,  will,  with- 
out delay,  fulfill  all  its  obligations  towards  the  liquidator  of  the  old  company,  as  they 
appear  by  the  decision  of  the  arbitrators  dated  February  11,  1902,  made  in  execution 
of  the  contract  dated  December  24,  1901. 

To  answer  these  questions,  it  is  necessary  to  refer  to  the  private  or 
judicial  documents,  the  chain  of  which  shows  at  once  the  nature  of  the 
Panama  Canal  concession  and  the  various  transfers  of  ownership  of 


314 


PANAMA   CANAL  TITLE. 


which  it  has  been  the  subject.  This  historical  review  has  been  already 
presented  with  the  greatest  clearness  and  the  most  scrupulous  accu- 
racy iii  different  opinions  given  cither  by  Mes.  Limbourg,  Devin,  Du 
Buit,  Thieblin  et  Gontard,  counsel  at  the  bar  of  Paris,  or  by  Messrs. 
Sullivan  &  Cromwell,  general  counsel  of  the  new  company  in  America. 
As  we  shall  have,  in  stating  our  opinion,  to  quote  the  exact  text  of  the 
documents  mentioned  in  these  statements,  it  is  enough,  for  brevity,  to 
review  generally  the  series  of  facts  and  instruments. 

.  L 

The  concession  for  the  Interoceanic  Panama  Canal  was  obtained  by 
M.  Wyse.  (Agreement  of  March  23,  1878— law  28  of  1878,  of 
Colombia.) 

Not  only  by  its  nature  was  it  transferable,  but  its  transfer  to  a  com- 
pany by  the  concessionary  and  by  this  company  to  other  companies  or 
capitalists  was  expressly  contemplated  by  article  21. 

U. 

It  was.  in  the  first  place,  to  the  Compagnie  Qniverselle  du  Canal 
Interoceanique  that  the  concession  was  transferred.  This  transfer  is 
the  subject  of  no  criticism.  It  was  made  in  consideration  of  certain 
advantages  granted  to  the  transferrer.  It  is  to  be  observed  that  every- 
body admits  that,  by  the  contribution  made  to  the  Compagnie  Univer- 
sclle,  the  latter  became  owner  of  the  concession  with  all  its  advantages 
without  anyone's  ever  thinking  of  maintaining  that  the  transferrer 
reserved  any  other  rights  than  thai  of  requiring  the  jH-rformance  of  the 
correlative  advantages  stipulated  in  the  transfer. 

in. 

There  is  no  need  of  reviewing  the  difficulties  encountered  by  the 
Compagnie  Universelle,  or  its  financial  vicissitudes.  In  1889  it  was 
driven  to  dissolution.  Application  was  made  to  two  jurisdictions — the 
one  recognized  in  the  company  a  commercial  character,  the  other  a 
civil  character.  It  was  the  latter  opinion  which  prevailed  before  the 
court  of  appeal,  and  it  is  the  decree  of  the  civil  tribunal  of  the  Seine 
of  February  4,  1889,  wrhich  having  become  res  judicata  governs  the 
liquidation  of  the  eompan\\ 

IV. 

The  same  decree  appointed  the  liquidator  (M.  Brunet),  and  in  the 
enumeration  of  the  powers  of  this  liquidator  mentions  that  of  trans- 
ferring or  contributing  to  any  new  company  all  or  part  of  the  corporate 
assets.  We  shall  say,  further  on,  that  this  express  statement  was 
supererogatory,  such  an  act,  under  French  legislation  and  jurispru- 
dence, being  by  law  within  the  powers  of  the  liquidator,  since  it  is  of 
the  essence  of  his  duties  to  realize  upon  the  corporate  assets.  It  should 
be  added  that,  in  this  particular  case,  transfer  by  contribution  to 
another  company  of  assets  of  this  sort  was,  in  truth,  the  only  possible 
way  of  realizing  upon  them,  the  property  involved  being  not  real 


PANAMA   CANAL  TITLE. 


815 


estate  or  personal  property  of  Little  importance,  and  already  producing 
a  return,  but  a  colossal  enterprise,  to  he  carried  out,  and  which  could 
produce  a  return  only  after  its  completion. 

V. 

It  is  unnecessary  to  review  the  modifications  in  the  liquidation  in 
consequence  of  death  or  other  causes,  and  it  is  enough  to  observe  that, 
if  the  person  of  the  liquidator  has  changed,  the  powers  of  liquidation 
have  remained  the  same. 

VI. 

Nor  do  we  think  it  necessary  to  enter  into  the  details  of  the  laws  for 
extension  of  the  concession  in  1890,  1893,  or  1900.  They  have,  for 
the  present  opinion,  no  other  importance  —  though  this  is  consider- 
able— than  to  show  the  approval  given  by  Colombia  to  the  transfer 
made  by  the  Compagnie  Universelle  for  the  benefit  of  the  new  company. 

VII. 

The  new  company  was  formed  on  October  20,  189-1.  In  form,  as  in 
substance,  it  is  a  private  company,  formed  under  the  general  act  of 
July  24,  1867,  and  that  of  August  1,  1893,  like  all  commercial  com- 
panies, and  Avithout  connection  with  the  Government.  All  the  formali- 
ties prescribed  acknowledgment  of  the  articles  of  incorporation 
before  a  notary,  subscription  to  the  shares,  payment  of  one-fourth  of 
the  shares,  declaration  of  subscription  and  of  the  payment  of  one- 
fourth,  meeting  of  the  shareholders  for  organization,  approval  by  a 
second  meeting  of  the  contributions,  etc.  All  legal  formalities  ivere 
fulfilled,  and  the  regularity  as  well  as  the  validity  of  this  company 
must  be  considered  as  beyond  doubt. 

VIII. 

The  articles  of  incorporation  show  the  purpose  of  the  company — the 
construction  and  operation  of  the  canal;  that  is  to  say.  the  utilization 
of  the  concession  of  1878  held  by  the  liquidation  of  the  Compagnie 
Universelle. 

The  purpose  of  the  compan}T  could  not  be  attained  unless  it  became 
owner  of  the  concession.  The  liquidator,  authorized  so  to  do  by  the 
decree  of  February  4,  1889,  became  a  party  to  the  articles  in  order  to 
contribute  to  the  company:  First,  this  concession  {all  rights  whateve?* 
resulting  for  the  benefit  of  the  company  in  liquidation  from  the  laws 
of  the  Government  of  Colombia  of  May  18,  1878,  and  December  26, 
1890,  etc.);  second,  the  works  executed,  yards,  plant,  etc.;  third,  the 
plans  and  estimates;  fourth,  the  rights  of  every  nature  of  the  Com- 
pagnie Universelle  relating  to  the  Panama  Railroad. 

In  a  word,  the  liquidator  contributes  to  the  new  company  the  orig- 
inal concession,  without  exception,  and  the  increment  resulting  from 
its  works  of  acquisitions. 


316 


PANAMA  CANAL  TITLE. 


IX. 

In  our  law  it  is  correct  to  say  that  contribution  to  a  company  is 
nothing  else  than  a  sale/'  It  is  in  essence  a  transfer  of  ownership.  It 
may  be  stated  that  the  numerous  precautions  taken  by  our  legislation 
concerning  commercial  companies  have  for  their  principal  purpose  to 
inform  the  public  of  the  assets,  and  so  of  the  solvency,  of  the  company 
formed,  whence  the  publicity  which  must  be  given  the  article-  of 
incorporation,  and  to  guarantee  the  substantial  character  of  the  con- 
tribution and  the  correctness  of  its  valuation,  whence  the  appointment 
of  commissioners  to  report  upon  the  value  of  the  contributions  and 
the  verification  by  a  shareholders1  meeting,  the  majority  of  which  is 
fixed  by  law. 

Therefore  to  say  contribution  to  a  company  is,  by  the  same  words, 
to  say  transfer  of  the  ownership  of  the  contribution  for  the  benefit  of 
the  company. 

X. 

Certainly,  the  ownership  contributed  may  be  subject  to  incum- 
brances, but  only  those  which  <<r<  enumerated  in  tin  <1<><-u u,<  nt  and  nnt<l<: 
public  ni''  valid  <ni<i  ma  1/  form  the  subject  of  amj  <tcfn>,i  at  law.  Any 
reticence,  any  dissimulation,  of  a  sort  to  modify  the  value  of  the  con- 
tribution, and.  consequently,  the  security  of  third  parties,  would  be 
fraudulent,  as  tending  to  give  a  false  idea  of  the  credit  of  the  com- 
pany. In  any  case,  it  would  be  wholly  inoperative,  void,  and  non- 
existent, and  could  not  furnish  a  foundation  for  any  action  susceptible 
of  being  brought  to  their  prejudice  before  the  courts. 

XI. 

The  only  encumbrances  which  there  can  be  upon  the  contribution 
made  by  the  liquidator  are,  then,  those  enumerated  in  these  articles: 

First,  The  obligation  of  the  new  company  to  conform,  with  regard 
to  the  grantor,  the  Colombian  Government,  to  the  terms  of  the  law  of 
1878  and  that  of  1890,  and  to  pay  all  sums  due  by  the  Compagnie 
Universelle  to  that  Government. 

Second.  The  obligation  to  provide  the  Compagnie  Universelle  and 
the  Government  of  Colombia  certain  limited  advantages.  Thus,  the 
new  company  must  pay  over  to  the  liquidator  of  the  Compagnie  Uni- 
verselle 60  per  cent  of  the  net  profits  and  issue  to  the  Colombian 
Government,  in  conformity  with  the  extension  law  of  December  26, 
1890,  50,000  full  paid  shares  out  of  those  issued  to  form  the  capital  of 
the  new  company. 

«  V.  Lyon  Caen  and  Renault,  Traite  de  Droit  Commercial,  t.  II,  No.  16: 
"Ownership  is  transmitted,  by  the  member  who  makes  the  contribution,  to  the 
association,  when  the  latter  constitutes  a  legal  person,  or  becomes  common  to  him 
and  his  fellow-members,  when  the  association  has  no  personality.  In  the  former 
case  ownership  is  entirely  transferred;  in  the  second  transfer  is  made  for  the  benefit 
of  the  other  members  only  to  the  extent  of  the  excess  beyond  the  share  assigned  to 
the  member  who  makes  the  contribution.  The  relation  of  the  member  by  whom 
the  contribution  is  made,  to  the  company,  or  to  his  fellow-members  (according 
to  the  distinction  just  stated),  is  analogous  to  the  relation  of  a  vendor  to  his 
purchaser." 


PANAMA   CANAL  TITLE. 


317 


There  is  nothing  in  this  part  of  the  articles  but  a  very  ordinary  and 
very  normal  method  of  compensation  for  the  contribution.  The  con- 
tributor, in  exchange  for  the  property  which  he  transfers  to  the 
company,  may  receive  either  a  price  in  money,  paid  once  for  all,  or 
an  eventual  interest,  a  share  in  the  profits  for  example,  resulting  from 
the  business,  or  full-paid  shares;  these  are  methods  between  which  he 
may  choose  and  which  may  be  either  modified  or  combined.  He  may 
then  receive  both  an  eventual  interest  and  shares. 

But  in  any  case,  and  whatever  may  be  the  form  of  remuneration,  this 
remuneration  is  the  equivalent  of  the  abandonment  to  the  company  of 
the  contribution,  and  it  falls  within  the  rule  that  the  contributor  can 
not  both  receive  the  price  stipulated  for  the  thing  transferred  and 
retain  all  or  any  part  of  his  ownership.  The  company  acquires  the 
ownership  of  the  things  contributed  and  the  contributor  loses  it. 

XII. 

Among  the  assets  of  the  liquidation  were  shares  of  the  Panama  Rail- 
road. They  were  also  transferred  to  the  new  company,  but  not  abso- 
lutely, like  the  other  property.  The  transfer  is  conditional.  If  the 
canal  is  completed  within  the  period  by  the  new  compan}T,  the  latter 
becomes  absolute  owner  of  the  shares.  In  the  contrary  case  it  must 
either  restore  the  shares  or  pay  for  them  by  an  indemnity  of  20, ( ><  K  >,<  m  h  i, 
the  share  of  prolits  assigned  to  the  liquidation  being  then  fixed  at  50 
per  cent. 

XIII. 

It  has  been  said  that  to  contribute  all  the  assets  of  the  dissolved 
company  to  a  new  company  was  within  the  ordinary  powers  of  the 
liquidator.  This  right  had  been  expressly  conferred  upon  the  liquida- 
tor by  the  decree  of  1889.  The  use  which  he  made  of  it  for  the  benefit 
of  the  new  company  has  received  the  sanction  of  the  act  of  July  1, 1893. 

By  recognizing  a  civil  character  in  the  Compagnie  Universelle  an 
almost  inextricable  situation  had  been  created.  In  a  civil  liquidation 
there  is  not,  as  in  a  bankruptcy  or  a  commercial  liquidation,  a  body  of 
creditors  represented  by  a  common  representative;  each  of  the  cred- 
itors remains  empowered  to  bring  individual^  any  suit,  any  claim; 
what  is  adjudged  against  or  for  him  can  neither  bind  nor  benefit  the 
rest.  It  was  in  order  to  apply  to  a  civil  liquidation,  by  virtue  of 
a  special  provision,  the  methods  of  a  commercial  liquidation  that 
the  act  of  Jul}7  1  was  passed.  But  it  had  to  consider,  at  the  same 
time  that  it  ousted  the  creditors  for  the  benefit  of  a  representative, 
the  protection  of  their  interests  in  the  liquidation.  It  devoted  a  title, 
title  2,  to  the  liquidator.  In  articles  10  and  12  it  expressly  sanctions 
the  right  of  transfer  of  the  assets  in  the  liquidator,  and,  while  sanc- 
tioning it,  surrounds  it  with  new  safeguards.  This  transfer  must  be 
conjwmed  by  the  tribunal.  It,  as  well  as  the  decree,  shall  be  published 
in  official  form;  intervention  may  be  made  upon  the  decree  during  the 
period  of  a  month.  When  this  period  has  passed,  and  when  the  decree 
has  become  final,  having  the  authority  of  res  judicata,  the  transfer  can 
no  longer  be  attacked  by  anyone. 

Thus,  and  subject  to  judicial  confirmation,  the  right  which  M.  Gau- 
tron  used  in  the  formation  of  the  new  company  is  sanctioned  at  once 
by  general  law,  the  decree  of  February     1884,  the  act  of  July  1, 1893. 


318 


I'ANAMA  CANAL  TITLE. 


XIV. 

The  formalities  prescribed  by  the  act  of  July  1,  1893,  were  observed. 
The  contribution  made  to  the  new  company  was  the  subject  of  :i  decree 
of  continuation  of  June  29,  1894.  It  was  regularly  published.  There 
were  interventions;  they  were  overruled  by  a  new  decree  of  August 
8,  L894.  The  right  of  the  liquidator  to  make  the  transfer,  as  it  appt  ars 
in  I  lie  articles  of  incorporation  of  the  new  company,  without  any  other 
obligation  than  those  expressed  in  the  articles,  is,  therefore,  erga 
omnes,  sanctioned  by  the  authority  of  res  judicata,  and  can  not  be  the 
subject  of  controversy  in  the  courts. 

XV. 

Article  75  of  the  articles  of  incorporation  provides  for  the  appoint- 
ment of  a  technical  commission,  after  the  expenditure  of  about  half  of 
the  capital,  for  the  purpose  of  making  a  report  upon  the  possibility 
of  completing  the  canal  and  the  most  suitable  means  for  reaching  that 
end.  It  was  appointed  on  February  2t>,  1898,  and  made  a  report  on 
February  23,  L899,  in  favor  of  the  possibility  of  constructing  the  canal. 
By  agreement  between  the  Liquidator  and  the  company  it  was  arranged 
that  the  meeting  of  the  shareholders  should  not  pass  upon  its  conclu- 
sions until  1903. 

We  may  therefore  suppose  that  at  that  time  the  liquidator  and  the 
company  were  considering  the  advantage  which  wrould  result  for  all 
from  a  new  arrangement. 

XVI. 

It  was,  in  fact,  at  the  commencement  of  1901  that  negotiations  began 
with  a  view  to  the  transfer  of  the  canal  to  the  United  States.  In  case 
of  transfer  to  the  United  States  the  nature  of  the  assets  of  the  liquida- 
tion wTould  undergo  a  change.  It  possessed,  before  this  transfer,  an 
interest  of  (>0  per  cent;  after  the  transfer  it  could  claim  in  the  proceeds 
of  the  property  of  the  new  company  a  share  corresponding  to  the 
benefit  which  it  would  receive  as  a  shareholder  and  from  its  interest  in 
the  compan}'. 

The  liquidator,  being  of  the  opinion  that  this  transaction  might  con- 
stitute, within  the  meaning  of  article  10  of  the  act  of  July  1,  1893,  a 
realizing  upon  assets,  complied  with  the  provisions  of  that  act.  He 
presented  an  application  on  July  30,  1901,  to  be  authorized  to  enter 
into  an  agreement  with  the  new  company  on  all  questions  which  the 
United  States  might  raise,  the  fixing  of  the  price,  and  the  setting  off 
to  the  liquidation  of  its  share  in  the  proceeds  of  this  sale. 

A  favorable  decree  was  made  on  August  2,  1901.  It  has  become 
final. 

On  December  24  an  agreement,  submitting  possible  controversies  to 
arbitration,  was  signed  by  the  liquidator  and  the  new  company,  and 
gave  the  new  company  power  to  deal  with  the  United  States  and  to  fix 
the  price  and  terms  of  the  transfer.  On  February  11  the  arbitrators 
proceeded  to  make  the  adjustment  which  had  devolved  upon  them. 

This  agreement  of  arbitration  was  confirmed  b}^  decree  of  March  19, 
1902.  The  same  decree  authorized  the  transfer  for  $10,000,000.  There 
was  an  intervention,    A  decree  of  July  13,  1902,  overruled  this  inter- 


PANAMA   CANAL  TITLK. 


vention.  It  was  continued  by  a  decision  of  August  5,  L902.  Here, 
again,  by  virtue  of  the  authority  of  res  judicata,  the  authorization 
given  by  the  Liquidation  to  tin1  new  company  to  transfer  to  the  United 
States,  the  mode  of  adjustment  to  be  reached  between  these  two  par- 
ties, are  so  many  res  judicata}  which  can  no  longer  be  the  subject  of  a 
new  action. 

XVII. 

In  truth,  this  procedure,  the  authority  of  which  is  of  great  value  in 
the  present  difficulties,  might  have  been  omitted.  The  tribunal  had. 
by  virtue  of  the  act  of  July  1,  1893,  authorized  the  liquidator  to  con- 
tribute to  the  new  company  the  assets  of  the  Compagnie  Qniverselle. 
The  consideration  for  this  contribution  consisted  of  50,000  shares 
issued  to  the  Colombian  Government  and  60  per  cent  of  the  profits  of 
the  new  company.  It  is  enough  to  say  that  it  was  subject  to  the  work- 
ing, to  the  fortunes  of  the  company,  to  all  acts  which  it  might  regu- 
larly and  lawfully  do,  either  by  virtue  of  general  law  or  by  virtue  of 
its  articles  of  incorporation.  If  this  company  might  lawfully  and  regu- 
larly transfer  its  concession,  the  liquidator  must  submit  to  this  as  to  all 
proper  acts  possible  by  the  articles  of  incorporation.  But  it  may  easily 
be  understood  that  he  was  anxious  to  protect  his  responsibility,  and 
that,  in  the  presence  of  a  possible  controversy,  he  settled  the  question 
in  the  direction  of  an  overscrupulous  application  of  the  act  of 
Finally,  it  is  to  be  noted  that  the  agreement  of  arbitration  had  for  its 
purpose  to  fix  the  method  of  settlement  between  those  interested  in  the 
proceeds  of  the  transfer  of  the  assets  of  the  new  company,  and  that  it 
was  not  unnecessary  for  a  liquidator  to  obtain  authority  to  make  a 
compromise,  an  act  w  hich,  in  French  law,  is  considered  as  particularly 
serious  and  subject  to  special  authorization. 

XVIII. 

In  any  case,  whether  the  approval  of  the  tribunal  was  necessary  or 
was  only  advisable  and  constituted  a  measure  of  prudent  precaution, 
it  is  beyond  doubt  that  the  liquidator  consented  and  was  authorized 
by  the  court  to  consent  to  the  proposed  transfer  by  the  new  company 
to  the  Government  of  the  United  States. 

XIX. 

Finally,  besides  the  liquidator  of  the  Compagnie  Universelle  and  the 
new  company,  there  was  a  third  party  interested  in  maintaining  the 
rights  which  it  had  under  the  concession  of  1878— the  Government  of 
Colombia.  Without  referring  to  other  documents  exchanged  between 
this  Government  and  that  of  the  United  States  of  America,  it  is  enough 
to  say  that  on  April  18, 1902,  the  envoy  extraordinary  of  the  Republic 
of  Colombia  to  the  United  States  agreed  with  the  Secretary  of  State 
of  the  United  States  upon  a  treaty,  article  1  of  which  contains  an 
authorization  by  the  Government  of  Colombia,  given  to  the  newT  com- 
pany, to  sell  and  transfer  to  the  United  States  its  rights,  privileges, 
property,  and  concessions,  as  well  as  the  Panama  Railroad,  and  all 
shares  and  parts  of  shares  of  this  company.  We  shall  omit,  therefore, 
from  the  present  opinion,  all  objections  based  upon  the  prohibition  of 
transfer  to  a  foreign  government  contained  in  the  law  of  187S. 


320 


PANAMA  CANAL  TITLE. 


XX. 

A  first  fact  appears  from  these  occurrences,  namely,  the  regular 
consent  given  by  Colombia,  the  liquidator,  and  the  new  company  to  the 
plan  of  transfer  to  the  United  States. 

FIRST  QUESTION. 

Has  the  New  Panama  Canal  Company  a  certain  and  absolute  title  to  the  property 
it  has  offered  for  sale  to  the  Government  of  the  United  States? 

The  title  of  ownership— certain  and  absolute  ownership— which  is  to 
be  invoked  for  the  benefit  of  the  new  company,  comes  from  the  con- 
tribution  which  was  made  to  it  by  the  liquidator  of  the  Compagnie 
[Jniverselle. 

Article  5  of  the  ai  t  ides  of  incorporation  of  October  20,  1894,  is  as 
follows: 

A  party  to  these  presents  is  M.  Jean  Pierre  Gantron,  judicial  administrator  of  the 
civil  tribunal  of  the  Seine,  residing  at  No.  i:>,  Rue  Tronchet,  Paris. 

"Acting  as  and  in  the  capacity  of  sole  liquidator  of  the  Compagnie  Universelle  du 
Canal  Interoceanique  de  Panama,  by  virtue  of  the  powers  conferred  by  judgment  of 
the  civil  tribunal  of  the  Seine,  dated  February  4,  1889." 

M.  Gautron,  appointed  to  said  office  of  liquidator  by  a  judgment  of  the  Chambre 
du  Conseil  of  the  civil  tribunal  of  the  Seine  dated  July  21,  1893,  in  said  capacity 
contributes  to  the  company: 

First.  All  rights  accruing  to  the  company  in  liquidation  from  the  laws  of  the  Gov- 
ernment of  the  United  States  of  Colombia,  dated  May  18,  1878,  and  December  26, 
1890,  as  well  as  from  any  decrees,  acts,  or  things  whatever  which  have  occurred  in 
the  execution  of  these  laws  with  all  the  advantages  provided  by  these  laws,  together 
with  all  lands  and  real  estate  granted  t<>  the  company  in  liquidation  or  acquired  by  it. 

All  subject  to  the  fulfillment  of  the  conditions  of  the  laws  and  extensions  of  the 
concessions,  and  to  the  payment  of  all  sums  remaining  due  from  the  liquidator  to  the 
Colombian  Government. 

Second.  The  works  executed  and  under  execution,  workshops,  buildings,  hos- 
pitals, plant,  erected  and  not  erected,  materials  and  supplies,  etc.,  belonging  to  the 
Compagnie  Universelle  du  Canal  Interoceanique  in  liquidation,  as  well  as  all  depos- 
its as  security  made  by  said  company  in  liquidation. 

Third.  The  plans,  estimates,  studies,  documents  of  every  nature  collected  by  the 
Compagnie  Universelle  du  Canal  Interoceanique,  relating  in  any  manner  to  the 
study,  execution,  or  exploitation  of  the  canal  or  its  dependencies,  as  well  as  the 
benefit  of  all  agreements  with  all  third  persons. 

Fourth.  The  rights  of  every  nature,  part  interests,  and,  generally,  any  others  what- 
soever, which  may  belong  to  "the  Compagnie  Universelle  du  Canal  Interoceanique  in 
liquidation,  in  the  railroad  from  Panama  to  Colon,  operated  by  an  American  com- 
pany, called  the  Panama  Railroad  Company,  whose  principal  office  is  at  New  York, 
as  said  rights  are  enjoyed  and  exist;  M.  Gautron,  as  liquidator,  binding  himself  to 
transfer  the  same  to  the  present  company  in  the  form  required  by  the  laws  of  the 
United  States  of  America  in  such  manner,  moreover,  as  the  said  rights  and  prop- 
erties are  enjoyed  and  exist  and  in  the  condition  in  which  they  are. 

The  present  company  shall  be  the  owner  of  the  property  and  rights  granted  and 
contributed  from  the  date  of  its  formal  organization,  except  as  hereinafter  provided, 
with  regard  to  the  Panama  Railroad. 

This  grant  and  contribution  are  made  by  M.  Gautron,  with  the  reservations  and 
subject  to  the  conditions  hereinafter  expressed,  to  wit: 

First.  There  shall  be  appropriated  to  the  liquidator  60  per  cent  of  the  net  profits 
of  the  enterprise,  as  these  profits  shall  be  determined  under  articles  51  and  52  hereof. 

Second.  There  shall  be  appropriated  50,000  shares,  full  paid,  on  account  of  those 
now  issued  to  the  Government  of  the  United  States  of  Colombia,  in  accordance  with 
the  extension  law  of  December  26,  1890. 

Third.  The  rights  of  every  nature  in  the  Panama  Railroad,  belonging  to  the  estate 
in  liquidation  and  contributed  by  M.  Gautron,  under  section  4  of  this  article,  shall 
become  the  property  of  the  present  company  from  and  after  the  stockholders'  meet- 
ing provided  for  by  "article  75  hereof,  without  any  pecuniary  compensation,  but  upon 


PANAMA  CANAL  TITLE. 


32  J 


the  express  condition  that  the  canal  be  constructed  within  the  time  fixed  by  the 
agreement  of  concession.  Upon  default  in  completion  within  such  time,  said  rights 
shall  revert  to  the  estate  in  liquidation. 

If,  contrary  to  all  expectation,  the  meeting  in  question  should  not  take  the  neces- 
sary action  for  the  completion  of  the  canal,  or  if  the  course  of  action  adopted  by  the 
meeting  can  not  be  carried  out,  the  said  rights  in  the  railroad  shall  remain  the 
property  of  the  present  company,  but  it  shall  pay  into  the  estate  in  liquidation  the  sum 
of  20,000,000  francs  by  way  of  indemnity,  and  the  share  of  prolits  set  apart  for  the 
estate  in  liquidation  shall  be  half  the  profits  of  the  present  company  without  other 
deductions  than  those  provided  in  sections  2  and  3  of  article  51  hereof. 

Accordingly,  said  rights  shall  remain  inalienable  in  the  hands  of  the  new7  com- 
pany until  either  the  payment  of  the  said  sum  of  twenty  millions,  or  the  entire  com- 
pletion of  the  canal. 

Fourth.  Until  the  entire  completion  of  the  canal,  M.  Gautron,  in  his  official 
capacity,  shall  have  the  right  to  appoint  a  commission  of  control,  composed  of  three 
members,  taken,  as  far  as  possible,  from  among  the  engineers  of  the  department  of 
bridges  and  roads  and  the  inspectors  of  finances,  to  inspect  the  progress  of  the  works, 
the  condition  and  maintenance  of  the  plant  and  buildings,  as  well  as  the  accounts 
relating  to  these  different  objects. 

The  expense  of  this  commission  shall  be  borne  by  the  new  company. 

I. 

It  is  indisputable  that  everything  which  forms  the  subject  of  the 
present  plan  of  transfer  to  the  United  States  is  comprised  in  the  con- 
tribution enumerated  in  article  5. 

There  is  no  dispute  as  to  the  validity  of  the  title  of  the  Compagnie 
Universelle  to  the  property  which  was  the  subject  of  this  contribution. 

If  the  Compagnie  Universelle  was  indeed  the  owner  of  the  conces- 
sion and  of  what  we  have  called  its  increment,  had  it  the  right  to 
transfer  them?  Did  it  transfer  them  regularly?  Such  are  the  first 
two  questions  to  be  examined. 

n. 

The  Compagnie  Universelle  had  the  right  to  transfer  the  concession, 
because  it  was  the  owner  of  it,  the  right  to  alienate  being  one  of  the 
elements  of  ownership. 

To  make  it  otherwise  it  must  be  shown  that  the  instrument  by  which 
it  acquired  them  contained  a  restriction  of  this  elementary  right.  Now, 
not  only  does  this  restriction  not  exist  in  the  contract  of  1878,  but  it 
cojitemplates  a  transfer,  and  even  successive  transfers,  and  authorizes 
them.  Furthermore,  the  transfer  made  was  known  to  the  original 
grantor  (the  Government  of  Colombia);  it  ratified  it  both  beforehand 
and  afterwards.  (See  especially  the  agreement  of  extension  of  Decem- 
ber 26,  1890,  stipulating  that  the  liquidator  shall  transfer  all  the  assets 
to  a  new  company — article  1  of  the  agreement  of  April  5,  1893,  giving 
the  liquidator  time  to  form  a  new  company — the  agreement  of  May  7, 
1900,  in  which  the  newly  formed  companjr  is  expressly  mentioned  and 
recognized.) 

The  right  of  transfer  by  the  Compagnie  Universelle  belonging  to 
it,  from  the  very  fact  that  it  was  owner,  this  right  not  having  been 
restricted  hy  the  agreement  of  concession,  but,  on  the  contrary, 
expressly  recognized  both  by  the  agreements  of  concession  and  by  the 
subsequent  agreements  above  mentioned,  we  are  of  the  opinion  that 
the  right  of  the  Compagnie  Universelle  to  transfer  to  the  new  com- 
pany the  whole  of  its  rights  is  absolutely  certain. 

8751—02  -21 


322 


PANAMA  CANAL  TITLE. 


in. 

Did  the  Compagnie  Universelle  do  regularly  what  it  had  the  right 
to  do?  We  say  the  company.  It  is  it  which  made  the  contribution. 
Here  we  must  avoid  an  ambiguity. 

It  is  only  in  common  language  thai  we  may  say  that  a  company  dis- 
appears from  the  fact  of  its  dissolution  and  Liquidation.  The  truth  in 
legislation,  at  '.oast  in  Franco,  is  that  it  survives  the  Liquidation.  No 
doubt  its  purpose  is  profoundly  changed;  that  is.  in  fact,  no  longerto 
undertake  or  continue  the  operations  mentioned  in  the  articles  of 
incorporation,  but  to  settle  them,  to  realize  upon  its  assets,  to  pay  off 
its  creditors,  to  divide  the  net  cash  assets  among  its  shareholders.  But 
for  all  these  operations,  the  legal  entity  of  the  company,  the  collective 
entity  designated  by  the  corporate  name,  remains  and  has  not  disap- 
peared. It  is  the  company  which  realizes;  it  is  the  company  which 
pays  the  creditors,  reimburses  its  shareholders,  answers  any  actions, 
carries  on  suits.  It  is  this  state  of  the  law  which  in  jurisprudence  is 
expressed  by  this  axiom:  The  company  survives  for  liquidation. a 

So,  the  liquidator  is  not.  with  regard  to  the  company,  a  third  party, 
but  a  representative  of  the  company.  The  law  directs,  tlx1  agreement 
usually  provides,  that,  after  dissolution,  the  company  should  he  repre- 
sented by  a  mandatory,  sui  generis,  the  liquidator.  Though  invested 
with  a  mandate  different  from  and  more  restricted  than  that  of  the 
board  of  directors,  for  example,  he  is  none  the  less  a  representative  of 
the  company;  if  he  alienates,  it  is  the  company  which  sells;  if  he 
receives,  it  is  the  company  which  receives.  Moreover,  anyone  may 
be  chosen  for  this  new  mandate,  a  third  party,  a  member  of  the  com- 
pany, a  member  of  the  board  of  directors,  the  board  of  directors  itself, 
but,  in  this  case,  it  will  act.  not  with  the  general  mandate  resulting 
from  the  articles  of  incorporation,  and  with  a  view  to  the  working  of 
the  company,  but  with  the  new  and  different  mandate  of  representing 
the  company  for  its  liquidation.  This  maxim,  that  the  company  sur- 
vives for  all  acts  of  liquidation,  upon  voluntary  or  judicial  dissolution, 
is  uncontested  in  French  law. 

It  is,  then,  the  company,  represented  by  its  liquidator,  which  made 
the  contribution. 

It  made  it  validly  for  the  following  reasons: 

First.  The  sale  of  the  assets  is  fully  within  the  powers  of  liquidation, 
because,  usually,  if  the  assets  are  not  composed  of  cash,  it  would  be 
impossible  without  a  sale  to  make  payment  and  division.  Contribu- 
tion to  a  company  is  in  reality  a  sale;  contribution  of  the  assets  to  a 
new  company  is  one  of  the  most  usual  forms  of  liquidation;  it  is 

«V.  Lyon  Caen  and  Renault,  Traite  de  Droit  Commercial,  t.  II,  No.  366: 
"When  a  company  is  dissolved,  there  is,  strictly  speaking,  between  the  former 
members,  only  a  community  of  interest.    They  are  owners  in  common.    Hence  it 
might  be  said  that  there  is  no  longer  an  artificial  person,  no  longer  a  corporate  fund 
distinct  from  the  private  property  of  the  members. 

"But  with  such  an  idea  there  will  be  danger  of  impairing  rights  acquired,  to  the 
great  detriment  of  the  credit  of  the  company,  or  of  hampering  the  working  of  the 
liquidation.  *  *  *  In  order  to  avoid  these  results,  jurisprudence  has  agreed  that, 
in  spite  of  the  dissolution,  the  dissolved  company  still  exists  as  an  artificial  person 
for  its  liquidation,  so  far  as  it  may  be  used  to  protect  the  rights  acquired,  and  not  to 
hinder  the  proceedings  of  liquidation." 


PANAMA  CANAL  TITLE. 


323 


also  fully  within  the  powers  of  liquidation.  (See  especially  Cass., 
May  L2,  1896. )a  , 

Second.  The  liquidator,  in  this  case,  received  this  power,  as  far  as 
necessary,  and  in  the  most  express  way,  from  the  decree  of  February 
4,  1889— 

appoints  M.  Joseph  Branet  liquidator  of  the  said  company,  with  the  broadest  powers, 
especially  to  transfer  or  contribute  to  any  new  company,  all  or  a  part  of  the  corporate 
assets. 

Third.  The  act  of  July  1,  1893,  adds  to  SO  many  authorizations 
anew  sanction;  in  regulating  the  exercise  of  the  right  of  contribution, 
it  makes  it  subject  to  formalities  dictated  by  the  interest  of  third 
parties,  by  the  very  fact  that  it  regulates  it,  it  sanctions  it.  We  shall 
show,  under  the  third  question,  that  this  act,  like  every  French  law, 
is  sovereign,  and  exempt  from  the  review  of  any  judicial  authority, 
even  the  highest. 

It  produces  this  noteworthy  result:  That  a  procedure  having  been 
prescribed,  making  the  validity  of  the  contribution  subject  to  for- 
malities of  procedure  and  publication,  if  these  formalities  were  com- 
plied with — and  we  know  that  they  were6 — the  contribution  can  no 
longer  be  contested  nor  attacked  by  anyone. 

It  follows,  hence,  no  less  clearly:  Firnt,  that  the  transfer  made  to  the 
new  company  by  contribution  was  regular;  second,  that  tt  can  no  longer 
be  attacked. 

IV. 

The  Compagnie  Universelle  had  the  right  to  contribute  its  assets  to 
another  company. 

This  right  it  exercised  in  the  person  of  its  liquidator  in  the  most 
regular  way. 

This  question  of  regularity  is  absolutely  settled. 

Thence,  we  arrive  inevitably  at  the  conclusion  that  the  title  of  the 
new  company  to  the  ownership  of  the  property  which  composes  the 
assets  of  the  Compagnie  Universelle  is  certain,  and  we  add  that  any 
contest  of  its  validity  would  be  in  France  defeated,  without  examina- 
tion of  the  merits,  by  the  plea  of  res  judicata. 

SECOND  QUESTION. 

Is  this  property  in  any  measure  legally  encumbered  by  the  debts  and  liabilities  of 
the  old  company?  In  the  event  of  the  United  States  purchasing  this  property,  would 
they  by  so  doing  become  responsible  for  such  debts  and  liabilities,  and  would  they 
assume  any  kind  of  obligation  toward  the  shareholders,  bondholders,  or  other  cred- 
itors of  the  old  company? 

By  reference  to.  what  was  said  above  (Sees.  IX  and  X)  it  will  be 
seen  that  this  second  question  is  entirely  governed  by  the  first.  The 
contribution,  we  have  said,  can  be  subject  only  to  liabilities  openly 

"  Adjudged  by  this  decision  that  in  case  of  changes  which  do  not  impair  the  pur- 
pose or  the  essential  bases  of  a  company,  the  judges  decide  absolutely  that  the  liqui- 
dators had  sufficient  power  to  enter  into  an  agreement  for  the  purpose  of  contributing 
the  corporate  assets  to  a  new  company  in  exchange  for  full  paid  shares.  (Comp. 
Trib.  Civ.  de  la  Seine,  July  27,  1892.    Rev.  des  Socictes,  1892,  p.  514.2. ) 

&See  decree  of  June  29,  1894,  publication  in  the  Officiel  of  July  1,  1894.  Decree  of 
intervention  of  August  8,  1894. 


324 


PANAMA   CANAL  TITLE. 


specified  in  the  agreement  of  contribution,  subject  to  the  examination 
of  the  commissioners  appointed  by  the  first  meeting,  accepted  upon 
their  report,  by  the  second,  and  without  an  estimate  o?  whicn  the  value 
of  the  contribution  can  not  be  estimated.  It  all  comes  down,  there- 
fore, to  considering  whether  the  contributions  were  made  subjecl  to 
the  payment  of  the  debts  and  liabilities  of  the  old  company  to  anv 
extent. 

II. 

The  slightest  examination  of  the  articles  of  incorporation,  and 
especially  of  article  5,  excludes  an  v  idea  of  a  general  transfer  of  assets 
and  liabilities.  Such  an  arrangement  was  excluded  beforehand  by  the 
most  ordinary  prudence,  for  it  would  have  put  the  new  company  in 
the  same  situation  as  the  old,  to  which  the  latter  succumbed. 

A  transfer  of  the  indebtedness,  then,  does  not  appear  in  the  agree- 
ment. 

The  deed  being  silent,  it  is  excluded  by  gmerallaw. 

A  debtor  may  dispose  of  his  property,  but  his  creditors  Have  no 
right  to  follow  it,  unless  it  is  subject  to  an  incumbrance  upon  the 
thing,  hypothecation,  pledge,  mortgage,  or  lien.  This  is  the  distinc- 
tion, fundamental  in  French  law,  taken  from  the  Roman  law,  between 
a  general  creditor  and  a  lienor  who  has  <i  right  hi  lh<  thmg.  M. 
Troplong  explains  this  in  these  terms: 

If  the  debtor  alienates,  the  bond  which  united  the  property  to  the  person  is  broken, 
and  the  thing  having  become  part  of  the  estate  of  another  owner,  the  creditor  will  have  no 
right  to  follow  it  there.  Whence  it  follows  that,  if  the  general  creditor  has  a  legal 
claim  upon  the  property  of  his  debtor,  this  claim  continues  only  so  long  as  his  debtor 
remains  owner  of  the  property.    (Priv.  et  hyp.,  sec.  6.a) 

It  must,  then,  be  considered  certain,  in  this  whole  affair,  that  a  trans- 
feror remains  alone  subject  to  his  general  indebtedness,  and  that  the 
transferee  can  only  be  bound  to  the  creditors  of  the  transferor  by  the 
obligations  of  a  contract,  and  only  to  the  extent  of  the  debts  which  he 
has  expressly  promised  to  pay.  French  law  reserves  to  the  general 
creditor  a  single  right,  that  of  having  the  instrument  of  transfer  itself 
annulled,  in  order  to  have  the  property  sold  restored  to  the  estate  of 

«V.  Paul  Pont  Des  privileges  et.  hypotheques,  t.  I,  No.  12  et  seq.: 

"Creditors  have,  as  security,  the  general  property  of  their  debtor,  personal  and 

real  property,  present  and  future. 

"This  right  of  security  embraces  all  the  property.     It  embraces  all  property 

present  and  future. 

"But  there  can  not  be  taken  into  account  property  wThich  the  debtor  may  have 
had  at  the  time  of  the  obligation  and  wdiich  has  ceased  to  be  his  when  the  perform- 
ance of  the  obligation  comes  to  be  enforced,  whether  because  he  has  sold  it  or 
even  because  he  has  given  it  away.  The  right  of  general  security  given  by  article 
2092  continues,  in  fact,  only  so  long  as  the  debtor  remains  in  possession;  this  is  very 
evident,  since  any  property  w  hich  the  debtor  had  in  the  past,  but  wrhich  he  has  no 
longer,  can  not  be  put  in  the  category  of  property  present  and  future,  the  only  prop- 
erty which  the  right  of  security  includes.  .  If,  then,  the  debtor  has  disposed  of  the 
thing  belonging  to  him,  if  he  has  put  it  out  of  his  estate  by  any  act  of  alienation,  he 
transferred  it  free  and  clear  of  this  right  of  security  by  which  it  was  affected  in  his 
hands;  and  it  is  in  this  respect,  among  others,  that  this  right  differs  from  a  mortgage, 
which  follows  the  real  estate  which  is  subject  to  it  into  whatever  hands  it  passes. 
Creditors  can,  no  doubt,  have  the  thing  restored  to  the  estate  of  their  debtor,  if  it 
was  alienated  in  fraud  of  their  rights  (article  1167).  But  if  the  thing  remains  out- 
side of  the  estate  of  their  debtor,  the  security  of  the  creditors  will  be  so  much  less, 
though  at  the  time  when  the  obligation  arose  the  thing  was  part  of  the  estate  of 
their  debtor,  from  which  it  has  since  been  separated." 


PANAMA  CANAL  TITLE. 


325 


• 

the  vendor.  If  it  is  not  restored  it  forms  pari  of  the  estate  of  the  pur- 
chaser, absolutely  protected  from  his  pursuit.  Bui  to  procure  this 
annulment,  contemplated  by  article4  1 L67  of  the  Civil  Code,0  the  cred- 
itor must  prove  two  things:  First,  That  the  sale  was  prejudicial  to  Mm. 
Second.  That  it  was  made  to  defeat  the  creditors  and  with  frn udnlcnt 
intent. 

Now  —and  here  appears  the  second  fundamental  consideration  which 
governs  all  this  argument  a  deed  consented  to  by  the  creditor,  or 
declared 'regular  in  litigation  with  him,  can  not  be  subject  of  the  action 
mentioned  in  article  1  HIT,  consequently  neither  the  transfer  by  the 
liquidation  to  the  new  company  nor  tin4  transfer  by  the  new  company 
to  the  United  States  can  any  longer  be  attacked;  first,  because  the 
transfer  from  the  Compagnie  Universelle  to  the  new  company  was 
approved  by  the  creditors  of  the  Compagnie  Universelle,  authorized 
by  the  court, ratified  by  t  he  act  of  1893,  declared  good  and  valid  by  the 
decrees  of  June  29  and  August  8,  1894;  second,  because  the  transfer 
to  the  United  States  was  approved  by  the  liquidator  of  the  Compagnie 
Universelle,  authorized  to  enter  into  the  agreement  of  December  24, 
1901,  because  this  agreement  was  itself  approved  by  the  decrees  of 
March  19  and  July  3,  1902,  and  by  the  decision  of  August  5,  1902; 
third,  because  the  Panama  bondholders  and  all  the  creditors  of  the  old 
company  were  represented  in  the  proceeding  which  ended  in  the 
decree  of  August  5,  and  there  is,  as  against  them,  an  admission  that 
the  agreement  is  advantageous,  a  judicial  decision  holding  that  it  is 
lawful. 

So  that  it  may  be  said  that  from  these  two  facts,  the  rights  of  gen- 
eral creditors  do  not  survive  a  transfer,  no  action  by  them  founded 
upon  article  1167  can  be  hereafter  brought,  it  would  follow  sufficiently 
and  evidently  that  the  transfer  to  the  United  States  would  involve 

for  the  purchaser  no  other  liabilities  than  those  expressed  in  the  deed/ 
that  henceforth  no  action  can  be  brought  by  former  creditors  for  the 
purpose  of  invalidating  this  transfer. 

XII. 

Without  dwelling  longer  upon  these  conclusions,  we  draw,  from 
what  has  been  said,  the  necessary  consequence  that  the  new  company 
can  only  be  bound  by  the  obligations  which  it  accepted  and  which 
are  expressed  in  writing  in  the  agreement  of  contribution  and  in  the 
articles  of  incorporation. 

These  obligations  are  the  following: 

First.  To  conform  to  the  clauses  and  conditions  of  the  concession 
(see  last  paragraph  of  article  1),  and  consequently,  the  concession  being 
contributed  by  the  Compagnie  Universelle  to  the  new  company,  it 
binds  itself  to  the  former  "  to  fulfill  all  the  conditions  of  the  laws  and 
extensions  of  the  concession  and  to  pay  all  sums  remaining  due  from 
the  liquidation  to  the  Colombian  Government."    (Art.  o,  par.  6.) 

Second.  To  pay  to  the  Compagnie  Universelle  in  liquidation  60  per 
cent  of  the  net  proceeds  of  the  enterprise. 

Third.  To  allot  to  the  Government  of* the  United  States  of  Colombia 


«  Art.  1167,  Civil  Code. 

Creditors  may  also  in  their  personal  name  attack  acts  done  by  their  debtor  in  raud 
of  their  rights. 


326 


PANAMA  CANAL  TITLE 


50,000  shares  entirely  full  paid,  out  of  those  created,  in  conformity 
with  the  law  of  extension  of  Deeember  26,  1890:a 

Nothing  can  be  clearer,  more  precise,  and  more  exactly  limited. 

Finally,  concerning  the  Panama  Railroad  shares,  we  have  said  (see 
Sec.  XII)  upon  what  conditions  subsequent  they  were  transferred  to 
the  new  company. 

Such  are  the  only  obligations  accepted  by  the  new  company  as  the 
equivalent  of  the  transfer.  They  are  the  price  of  the  transfer.  They 
have  nothing  to  do  with  the  indebtedness  of  the  Compagnie  Univer- 
sale.   Creditors  of  the  latter  do  not  become  creditors  of  the  former. 

Still  further,  the  fact  of  estimating  the  price  of  the  transfer  excludes 
any  hypothesis  of  a  general  transfer  of  assets  and  Liabilities,  for  a  fixed 
price  is  not  given  for  assets  transferred,  if  the  purchaser  must  bear 
the  unascertained  burden  of  unknown  liabilities. 

In  short,  the  regular  transfer  of  the  concession  does  not  entail  for 
tin*  new  company  any  obligation  to  pay  to  any  extent  whatever  the 
liabilities  of  the  Compagnie  CJniverselle,  but  only  an  obligation  to  bear 
the  charges  above  mentioned,  which  are  enumerated  to  the  exclusion 
of  all  others. 

We  repeat  again,  as  an  indisputable  thing,  that  any  other  obligation, 
not  written,  not  expressed  and  it  has  never  been  alleged  by  the  Com- 
pagnie CJniverselle,  nor  by  anyone,  that  there  was  a  secret  stipulation — 
would  be  null,  even  if  it  were  not  unlawful  with  regard  to  the  con- 
tracting parties.  In  corporate  matters  there  can  be  neither  secret 
compact,  nor  trust,  nor  defeasance. 

XIV. 

Answering  the  second  section  of  the  second  question,  it  is  by  this 
very  fact  demonstrated  that  in  accepting  a  transfer  from  the  new  com- 
pany of  the  rights  inherent  in  the  concession  of  which  it  has  become 
the  owner  the  United  States  do  not  expose  themselves  to  answering  for 
any  debt  whatever  of  the  Compagnie  Ujiiverselle  to  third  parties. 
For  this  there  are  two  conclusive  reasons:  First.  What  has  been  said 
of  the  effects  of  the  transfer  b}T  the  Compagnie  Universelle  to  the  new 
company  would  be  true  of  a  transfer  frv  the  new  company  to  the 
United  States.  The  latter  will  owe  the  new  company  only  the  price 
stipulated,  and  in  regard  to  its  creditors  they  wdll  contract  no  other 
obligation  than  that  of  paying  their  debtor  the  price  agreed  upon. 
If,  as  is  plain,  the  purchaser  becomes  a  debtor  only  for  the  purchase 
price,  he  does  not  become  the  debtor  of  all  the  creditors  of  the  trans- 
feror. This  is  not  the  case  with  general  successors,  such  as  natural 
or  testamentary  heirs  of  the  purchaser. 

If  the  purchaser — the  United  States  in  this  case — does  not  become 
the  debtor  of  the  creditors  of  the  new  company,  still  less  would  he 
become  the  debtor  of  the  creditors  of  the  old  company.  To  raise  the 
question,  they  must  first  have  become  creditors  of  the  new  company. 
Now  we  have  shown  that  they  are  nothing  of  the  sort;  but,  were  the 

«  First.  There  shall  be  appropriated  to  the  liquidation  a  share  of  60  per  cent  in  the 
profits  of  the  enterprise,  as  these  profits  shall  be  determined  under  articles  51  and  52 
hereof. 

Second.  There  shall  be  appropriated  50,000  shares,  full  paid  out  of  those  now  cre- 
ated for  the  Government  of  the  United  States  of  Colombia,  in  conformity  with  the 
extension  law  of  December  26,  1890. 


PANAMA  CANAL  TITLE. 


327 


terms  of  the  contribution  of  1894  different,  it  would  he  enough  to 
destroy  their  claim  to  consider  that  the  act  of  transfer  to  the  Tinted 
States,  in  the  form  proposed,  will  not  confer  upon  the  creditors  of  the 
new  company  any  right  either  to  follow  its  property  into  the  hands  of 
the  purchase-  or  against  the  purchaser  personally. 

XV. 

What  we  have  said  with  regard  to  the  creditors,  either  of  the  new 
company  or  the  old,  is  absolutely  true  in  regard  to  their  shareholders. 
The  same  deeds  can  be  set  up  against  them.  The  transfers  made  have, 
with  regard  to  them,  the  same  bearing,  the  same  regularity.  No  more 
than  the  bondholders  can  they  impose  upon  tin1  transferee  an  obliga- 
tion which  has  not  been  stipulated.  Against  them  may  be  set  up  an 
additional  plea,  drawn  from  the  fact  that  to  these  deeds  they  are  not 
third  parties;  they  are  parties  to  the  deeds.  It  is  enough  to  say  that 
if  these  deeds  may  be  successfully  set  up  against  third  parties,  it  is 
not  reasonable  that  they  should  be  attacked  by  those  who  signed  them. 

XVI. 

The  objection  has  been  made,  it  appears,  that  the  Compagnie  Uni- 
verselle  had  not  completely  divested  itself  of  the  property  transferred. 
As  a  proof  is  cited  the  fact  that  it  stipulated  for  a  share  of  60  per 
cent  in  the  profits.  From  this  it  is  argued  that,  this  share  being- 
taken  away  from  it  by  the  transfer  to  the  United  States,  it  may  recover 
al  or  a  part  of  its  former  assets. 

We  oppose  to  this  erroneous  argument  two  decisive  answers: 

First.  The  Compagnie  Universelle  might  have  required  as  the  price 
of  the  transfer  a  sum  of  money  fixed,  immutable,  and  which  could 
neither  be  increased  nor  diminished.  It  did  not  do  so  for  the  simple 
reason  that  it  never  could  have  got  a  lixed  price  which  was  at  the  same 
time  a  high  price  for  a  concession,  the  carrying  out  of  which  remained 
subject  to  so  many  hazards  that  the  parties  considered  that  the  possi- 
bility of  carrying  it  out  could  be  determined  only  later.  (See  article 
75  of  the  articles  of  incorporation.)  It  preferred  to  stipulate  for  an 
indeterminate  price,  consisting  of  60  per  cent  of  the  profits  to  be  made  by 
a  company.  By  a  company,  that  is  to  say,  by  an  artificial  person, 
subject  to  the  causes  for  involuntary  legal  dissolutions  and  which 
reserved  to  itself  expressly  (see  article  60)  the  right,  if  it  thought 
advisable,  to  dissolve  itself  voluntarily. 

Whence  it  follows  that  it  is  as  if  the  provision  had  been  that  it  gave 
up  its  assets  in  consideration  of  60  per  cent  of  the  profits  *<>  long  as  the 
company  should  not  he  under  the  legal  necessity  of  dissolution  or  should 
not  tli talc  it  necessary  to  dissolve.  And  let  it  not  be  said  that  this 
second  hopythesis  allowed  the  new  company  to  defeat  the  liquidation 
by  dissolving  itself  arbitrarily.  In  fact,  without  mentioning  the  guar- 
anties furnished  by  the  conditions  which,  in  that  case,  must  be  com- 
plied with,  on  the  one  hand,  dissolution  gave  to  the  Campagnie  Uni- 
verselle the  right  to  appear  upon  the  liquidation  of  the  new  company 
and  to  receive  a  part  of  its  assets  corresponding  to  the  value  of  its 
ultimate  60  per  cent;  on  the  other  hand,  if  the  dissolution  were  intended 
to  defeat  it  or  fraudulent,  the  liquidator  of  the  Compagnie  Univer- 
selle could  have  it  annulled.    And  here  we  reach  the  second  answer. 


328 


PANAMA  CANAL  TITLE. 


Second.  Not  only  did  the  liquidation  not  consider  the  alienation  of 
the  concession  harmful  to  it,  but  it  desired  it,  preferring  a  certain  and 
speedy  price  to  remote  and  uncertain  profits.  It  prepared  the  way 
for  it.  It  had  itself  authorized  to  discuss  the  terms  and  fix  the  bene- 
fit which  would  come  to  it  therefrom.  This  consent  was  sanctioned 
both  by  the  decree  of  March  19, 1902,  by  the  decree  upon  intervention 
of  July  3,  and  b\r  the  decision  of  August  5.  Let  us  add  that  the  rep- 
resentative of  the  bondholders  has  stated  that  he  himself  did  not  inter- 
vene, because  his  clients  approved  the  transfer/' 

So,  if  the  liquidation  had — and  it  certainly  had  not — the  right,  in 
case  of  transfer  by  the  new  company,  to  maintain  that,  by  the  effect 
of  the  failure  to  can  y  out  the  clause  relative  to  the  (50  per  cent,  it 
should  be  restored  to  the  property  which  it  had  alienated,  it  expressly 
decided  not  to  do  so,  and  its  acquiescence  in  the  alienation  sanctioned 
by  the  court  has  become  irrevocable  by  the  effect  of  judicial  decisions 
which  have  become  n*  judicata.  We  may,  therefore,  think  it  strange 
that  to  disturb  the  resolutions  to  be  passed  there  is  argued  the  possi- 
ble exercise  by  the  Liquidation  of  a  right  which  it  did  not  have,  and 
which,  in  any  case,  it  has  renounced  by  having  it  adjudged  that  it  was 
for  its  interest  that  the  transfer  should  be  carried  out.  The  same 
argument  might  be  used  against  the  bondholders  or  creditors  of  the 
Compagnie  Universelle. 

XVII. 

We  give  no  more  force  to  the  arguments  drawn  from  the  considera- 
tion that,  the  liquidation  having  stipulated  for  the  right  to  appoint  a 
commission  for  the  purpose  of  inspecting  the  progress  of  the  works, 
it  may  be  inferred  fhat  it  had  not  divested  itself  of  the  ownership  of 
the  concession  and  of  its  increment. 

There  is  no  correlation  between  these  two  ideas. 

Nothing  prevents  a  contributor  who  has  received  shares  in  pay- 
ment— w^hence  it  follows  that  he  will  be  paid  or  not  according  as  the 
enterprise  shall  be  well  or  ill  managed — from  requiring  guaranties  of 
good  management.  If  he  obtains  them  he  is  none  the  less  a  share- 
holder, and  if  he  is  a  shareholder  he  is  no  longer  the  owner  of  prop- 
erty contributed,  but  of  what  represents  it  in  capital  stock. 

It  will  never  be  possible,  at  least  under  our  legislation,  to  reconcile 
these  two  facts — a  contribution  in  consideration  of  a  price,  of  whatever 
nature  it  may  be;  retention  of  ownership  of  the  contribution  by  him 

a  Maitre  Charneau,  attorney,  gave  notice  in  the  name  of  the  sieur  Lemarquis  in  his 
official  capacity,  for  whom  he  appeared,  to  Maitre  Caillet  and  de  Bieville,  of  requests 
to  find  upon  intervention  by  which  alleging: 

That  the  sieur  Lemarquis  in  his  capacity  of  representative  of  the  holders  of  Panama 
bonds  had  the  right  of  intervention  in  the  proceeding  pending  between  the  sieur  Gau- 
tron  in  his  official  capacity  and  the  sieur  Donadieu. 

That  the  transfer  proposed,  to  the  Government  of  the  United  States  of  America,  to 
which  the  sieur  Gautron  has  consented,  is  favorable  to  the  interests  of  the  bondholders. 

He  asked  that  it  might  please  the  tribunal. 

To  recognize  Maitre  Charneau  in  his  appearance  for  the  sieur  Lemarquis  in  his  offi- 
cial capacity. 

To  recognize  the  intervention  of  the  sieur  Lemarquis,  that  he  joined  in  the  requests 
for  judgment  of  the  liquidator,  and  that  he  approved  wholly  the  understanding 
reached  between  the  liquidator  and  the  New  Panama  Company  for  the  purpose  of 
a  transfer  of  the  enterprise  to  the  Government  of  the  United  States  of  North  America 
for  the  sum  of  $40,000,000. 

And  to  decree  according  to  law  as  to  the  costs. 


I 

PANAMA  CANAL  TITLE.  329 

who  has  made  the  transfer  and  has  received  the  equivalent  for  it.  But 
there  is  more.  It  is  precisely  because  the  liquidation  transferred  the 
ownership  of  the  concession  and  of  the  works  begun,  and  divested 
itself  of  it,  that  it  was  important  for  it  to  stipulate  for  a  guaranty  of 
good  management  in  the  future;  for  if  it  had  retained  the  ownership, 
so  that  the  new  company  was  only  a  sort  of  mandatory,  interested  in 
the  proper  completion  of  the  enterprise,  this  stipulation  would  then 
have  been  wholly  needless. 

THIRD  QUESTION. 

Is  the  law  of  July  1,  1893,  unimpeachable  and  absolute  according  to  the  constitu- 
tion and  according  to  French  law?  Have  the  French  judicial  authorities  power  to 
discuss  the  validity  of  said  law? 

The  act  of  July  1, 1893,  is,  according  to  the  French  constitution,  not 
open  to  attack  and  of  absolute  authority.  The  French  constitution  in 
this  point  differs  wholly  from  that  of  the  United  States,  which  has  con- 
ferred upon  the  supreme  judicial  authority  a  right  of  review  over  legis- 
lative acts.  More  than  one  writer,  more  than  one  politician  in  France, 
has  emphasized  the  dangers  of  the  sovereignty  of  the  legislative  powrer 
and  has  praised  the  precautions  accepted  in  the  United  States  against 
the  possible  excesses  or  errors  of  legislators.  We  have  not  here  to 
take  sides  in  this  controversy,  but  to  state  wdiat  is  the  fact.  We 
declare  that  there  is  no  superior  power  which  can  either  modify  or 
annul  a  law  passed  by  the  two  chambers.  Still  further,  the  highest  of 
our  judicial  jurisdictions,  the  court  of  cassation,  or  supreme  court,  is 
in  its  essence  created  to  insure  execution  by  the  inferior  tribunals  of 
all  laws  as  the}'  are  promulgated.  Far  from  its  being  able  to  modify 
them  or  suspend  their  execution,  its  duty  is  to  reverse  any  decision 
which  has  either  misinterpreted  or  wrongly  applied  a  law,  though  it 
appear  detestable  to  the  high  court.  It  is  enough  to  say  that  the  act 
of  1893  can  not  now  be  the  subject  of  revision  or  criticism  on  the  part 
either  of  the  executive  power  or  of  the  judicial  power. 

A  law  passed  in  France  by  the  Parliament  (the  two  chambers)  can 
only  be  repealed  or  modified  by  another  law  passed  by  Parliament. 
But  were  this  done,  the  new  law  is  applicable  only  for  the  J'xture,  and 
all  acts  done  before  it  goes  into  force  remain  subject  to  the  former 
legislation.  Whence  it  follows  that  were  the  act  of  July  1,  1893, 
abrogated  or  amended,  all  acts  done  previous  to  this  event  will  be 
valid  or  not  ccording  as  they  are  or  are  not  in  conformity  with  its 
provisions. 

FOURTH  QUESTION. 

Is  the  New  Panama  Canal  Company  in  any  measure  a  government  corporation  in 
France,  and  is  the  cooperation  of  the  French  Government  necessary  for  the  transfer 
which  the  New  Panama  Canal  Company  proposes  making  to  the  Government  of  the 
United  States? 

In  the  period  prior  to  1867  the  formation  of  certain  commercial 
companies  was  subject  to  the  authorization  of  the  Government  (a  cer- 
tain number  of  joint-stock  companies  organized  before  that  date  remain 
subject  to  the  old  legislation).  In  1867  the  general  law  applicable  to 
commercial  companies  was  radically  changed,  and  thenceforth,  by 
observing  the  procedure  and  the  rules  for  publicity  prescribed  by  the 
act  of  July  24,  companies  arc  made  freely,  like  any  other  contract. 


330 


PANAMA   CANAL  TITLE. 


Even  before  1867  an  authorized  company  was  in  no  way  a  govern- 
mental company;  having  obtained  authorization,  it  remained  private, 
and  preserved  this  private  character  for  everything  concerning  dis- 
posal of  its  property.  Liquidation,  realization  upon, or  sale  of  its  assets. 

A  fortiori,  a  company  like  the  new  company,  organized  under  the 
act  of  July  24,  L867,  is  absolutely  independent  of  the  Government. 
The  latter  did  not  have  to  intervene  for  its  formation,  and  does  qoI 
have  to  intervene  in  its  management  or  its  liquidation.  This  the  Gov- 
ernment has  declared  several  times,  on  March  22,  L882,  in  diplomatic 
correspondence,  and  later  in  L893  on  the  floor  of  the  Chamber  of 
I  )eputies. 

That  the  Government  and  Parliament  intervened  to  authorize  the 
issue  of  lottery  bonds  is  explained  in  the  simplest  way  by  a  circum- 
stance which  has  nothing  to  do  with  1h<  nature  of  the  company.  The 
issue  of  lottery  bonds  is  considered  in  our  Legislation  as  alo1t< ery :  no 
lottery  can  be  established  by  private  persons,  any  more  than  by  a 
company,  without  the  authorization  of  the  minister  of  the  interior,  if 
it  does  not  exceed  a  certain  figure,  without  a  law,  if  it  exceeds  this 
figure;  therefore  a  bill  was  necessary  to  authorize  the  issue  of  Panama 
lottery  bonds,  and  the  company  no  more  lost  its  private  character 
than  a  private  person  who  should  have  asked  and  obtained  authority 
to  establish  any  other  lottery. 

The  new  company,  then,  is  certainly  not  a  governmental  company, 
and  the  French  Government  has  not  to  intervene  and  cannot  inter- 
vene in  the  transfer  which  it  makes  to  tin1  United  States. 

FIFTH  QUESTION. 

Will  the  proposed  transfer,  duly  carried  out  by  deed  of  the  New  Panama  Canal 
Company  and  by  deed  of  the  liquidators  of  said  company,  the  dissolution  of  which 
would  be  declared,  place  in  the  hands  of  the  United  States  an  absolute  and  uncondi- 
tional title  to  the  transferred  property,  without  the  United  States  assuming  thereby 
any  of  the  obligations  of  the  old  company  to  the  shareholders,  bondholders,  and 
other  creditors  of  said  company? 

Of  course  the  New  Panama  Canal  Company,  having  made  the  transfer,  will, 
without  delay,  fulfill  all  its  obligations  toward  the  liquidator  of  the  old  company  as 
they  appear  by  the  decision  of  the  arbitrators  dated  February  11,  1902,  made  in 
execution  of  the  contract  dated  December  24,  1901. 

Thus  stated,  the  question  is.  perhaps,  not  presented  with  sufficient 
clearness.  It  appears  from  the  verbal  explanations  which  have  been 
given  us  that  it  would  be  more  exactly  formulated  in  these  terms: 

Has  the  new  company  power  to  transfer  the  concession,  and  its  assets 
connected  therewith,  to  a  third  party,  for  example,  the  United  States? 
In  what  form  and  by  whom  should  this  transfer  be  carried  out.  to  place 
in  the  hands  of  the  purchaser  a  title  of  absolute  and  unconditional 
ownership  to  the  property  transferred,  without  the  United  States 
assuming  any  of  the  obligations  of  the  old  company  to  the  bondholders, 
shareholders,  or  creditors  of  the  said  company  I 

I. 

We  have  said  that  a  transfer  by  a  company,  as  by  a  simple  private 
person,  entails  no  obligation  for  the  transferee  to  pay  the  debts  of  the 
transferor;  the  obligations  of  the  transferee  are  limited  by  the  agree- 
ment itself.  The  only  obligations,  besides  those  stipulated,  which  fol- 
low the  subject  of  the  transfer  into  the  hands  of  the  new  owner  are  the 
obligations  annexed  to  the  thing— those  which  constitute  debts  of  the 


PANAMA    (  ANAL  TITLK. 


331 


thing  sold r  and  not  of  the  vender.  Hut  this  supposes,  of  course,  that 
the  sale  is  made  by  a  person  capable  of  making  it,  or  authorized  to 
make  it,  if  that  is  necessary  in  a  word,  a  valid  sale.  The  whole  ques- 
tion, then,  lies  in  considering  whether  the  new  company  has  power  to 
alienate  its  concession  and  the  property  appurtenant  to  it. 

II. 

It  may  be  said  that  if  the  company  has  the  right  to  sell  a  part  of  it- 
assets,  it  can  not  alienate  the  very  object  of  the  company  without  the 
company's  disappearing,  that  by  so  doing  it  goes  contrary  to  its  pur- 
pose, which  is  to  accomplish  the  enterprise  in  view  of  which  it  was 
formed,  and  that  its  duty  is  to  procure  for  the  parties  in  interest  its 
accomplishment. 

This  idea,  correct  as  a  general  statement,  could  not  be  made  an 
invariable  and  absolute  rule  of  law  without  the  most  serious  incon- 
veniences. By  it  a  company  would  be  bound  to  pursue  the  accom- 
plishment of  its  purpose  until  the  complete  exhaustion  of  its  resources, 
and  to  consume  then  progressively,  even  though  it  was  certain,  either 
that  the  purpose  can  not  be  accomplished  by  it  or  that  it,  as  well  as 
all  parties  interested,  should  find  it  clearly  to  their  advantage  to  transfer 
its  enterprise  instead  of  pursuing  it. 

This  pernicious  rule  does  not  exist  in  our  legislation  concerning 
companies.  On  the  contrary,  article  37  of  the  act  of  1867  requires 
that  in  case  three-fourths  of  the  capital  is  lost  the  shareholders'  meet- 
ing should  be  consulted  as  to  the  propriety  of  continuing  the  enter- 
prise or  abandoning  it,  and  it  is  enough  in  this  case  that  one-fourth  of 
the  capital  be  represented. 

If  the  legislator  requires  the  company  to  decide  under  the  circum- 
stances above  mentioned  he  allows  it,  even  without  these  circum- 
stances, to  decide  to  stop  the  enterprise  under  the  single  condition  that 
the  meeting  of  stockholders  should  comprise  half  the  shares  of  the 
capital.  This  is  a  settled  point  in  doctrine  and  in  law.  even  though 
the  articles  of  incorporation  are  silent.  (See  opinion  of  Mes.  Lim- 
bourg,  Devin,  Du  Buit,  Henri  Thieblin  et  Gontard.  p.  49.) 

If  the\r  have  expressly  reserved  to  the  shareholders'  meeting  the 
right,  in  any  state  of  the  case,  of  passing  upon  the  propriety  of  con- 
tinuing or  discontiruing  the  corporate  business,  no  doubt  can  remain. 

III. 

This  is  precisely  the  situation  of  the  new  company,  whose  articles 
(article  60) a  gave  the  shareholders' meetings  regularly  constituted — 
that  is  to  say,  in  conformity  with  the  provisions  of  articles  61  and  62 — 
the  right  to  shorten  the  duration  of  the  company,  to  extend  it,  or 
immediately  to  dissolve  the  company. 

«If  experience  shows  the  desirability  of  making  modifications  in  or  additions  to  the 
present  statutes,  the  stockholders'  meeting  shall  provide  for  the  same  in  the  manner 
fixed  in  articles  61  and  62  hereof. 

It  may  especially  determine  upon — 

A  reduction  of  the  capital  of  the  company; 

A  reduction  in  the  duration,  the  prolongation,  or  the  earlier  dissolution  of  the 
company; 

Its  consolidation  with  other  companies; 

It  may  even  introduce  modifications  in  the  objects  of  the  company,  without,  how- 
ever, changing  their  essential  character. 


332 


PANAMA   CANAL  TITLE. 


Now,  this  is  a  provision  left  by  the  act  of  1867  to  the  general  rule  of 
freedom  of  agreement,  and  do  one  in  France  will  contest  its  lawful- 
ness. Let  us  add  that  it  was  made  necessary  for  the  new  company  by 
the  circumstances  under  which  it  was  formed;  a  company  to  attempt, 
created  to  protect  the  concession,  to  prevent  its  lapse,  uncertain  (the 
articles  show)  whether  it  could  itself  complete  the  enterprise,  uncer- 
tain (the  articles  again  show)  whether  the  enterprise  could  be  carried 
out,  at  least  as  it  had  been  planned. 

IV. 

We  sa}T,  consequently,  that  the  new  company  may  certainly  put  an 
end  to  its  operations  and  transfer  the  concession.  It  remains  to 
examine  the  second  part  of  the  question:  In  what  form  and  by  whom 
should  the  transfer  be  made  to  place  in  the  hands  of  the  purchaser  a 
title  of  ow  nership  not  open  to  attack. 

Several  solutions  may  be  adopted  with  perfect  safety. 

The  new  company  may,  by  virtue  of  article  00,  a  meeting  of  share- 
holders having  been  called  in  conformity  with  articles  61  and  62,  put 
itself  in  liquidation. 

Supposing  that  it  limited  itself  to  appointing  a  liquidator  with  ordi- 
nary powers  of  liquidation,  no  more  will  be  needed  to  enable  him  to 
transfer  thecorporate  assets,  in  w  hole  or  in  part,  to  a  third  party  with 
the  most  absolute  regularity. 

We  refer  here  to  Section  III  of  the  first  question,  and  we  repeat,  to 
sum  up,  that  the  receiver  has  full  power  to  carry  out  a  sale  of  the 
assets;  that  he  then  binds  the  company  itself;  that  it  is  it  which  alien- 
ates, by  its  mandatory;  that  it  survives,  as  an  artificial  person,  until 
final  distribution,  and  that  to  deal  with  the  liquidator  for  the  purchase 
of  the  assets  is  to  deal  with  the  company  itself. 

But  the  articles  allow  the  company  to  do  something  still  more  cer- 
tain and  less  open  to  attack,  if  possible.  The  shareholders'  meeting 
may  (article  63)  fix  the  manner  of  liquidation  and  decide,  for  example, 
either  that  it  shall  take  place  by  contribution  of  the  assets  to  a  new 
company  or  by  sale  in  parcels  or  by  transfer  as  a  whole.  The  liquida- 
tor, conforming  to  this  specific  mandate,  will  bind  the  company  to 
third  parties  in  the  same  way  as  if  they  had  dealt  with  the  company 
itself. 

V. 

A  second  solution  is  furnished  by  the  following  consideration: 
To  show  that  a  company  can  not  alienate  its  corporate  capital,  it  is 
observed  that  this  act  of  alienation  puts  an  end  to  its  operation,  which 
is  strictly  correct.  But  this  demonstrates  only  that  the  company  which 
alienates  its  assets  by  the  same  act  brings  about  its  dissolution,  and, 
as  it  has  been  demonstrated  that  the  company  has  full  power  to  dis- 
solve itself,  it  remains  proved  that  it  has  the  same  right  to  do  any  act 
involving  its  dissolution. 

The  new  company  may,  then,  by  a  decision  of  a  meeting  of  share- 
holders, approve  the  proposed  transfer,  give  its  board  power  to  carry 
it  out  and  decide  at  the  same  time  that,  by  the  fact  of  carrying  it  out, 
the  company  shall  be  altogether  dissolved.  Then  dissolution  will  be 
the  consequence  of  the  transfer  itself.    This  is  the  solution  suggested 


PANAMA   CANAL  TITLE. 


833 


by  my  eminent  colleagues  of  Paris.  It  is,  in  my  opinion,  absolutely 
legal.  A  meeting  of  shareholders  which  may  vote  dissolution  may  vote 
an  act  involving  dissolution.  It  will  be  necessary,  however,  for  this 
decision,  to  comply  with  the  same  conditions  as  if  it  operated  immedi- 
ate dissolution;  that  is  to  say,  that  a  meeting  of  shareholders  should 
be  made  up  in  conformity  with  articles  61  and  62  of  the  articles,  and 
thai  the  decision  should  be  published  in  the  form  prescribed  in  the  act 
of  July  24,  1867. 

VI. 

There  is  a  third  solution,  no  less  legal.  Against  the  preceding,  an 
objection  might  be  raised  which  is,  no  doubt,  only  specious,  but  which 
it  would  be  preferable  to  avoid.  It  may  be  said  that  a  meeting  of 
shareholders  which  votes  for  an  act  involving  dissolution  and  which 
thus,  and  by  that  very  fact,  votes  for  dissolution,  can  not  at  its  will 
postpone  consequences  of  that  decision;  that  by  the  effect  of  this  vote 
dissolution  takes  place  immediately,  and  that  from  that  moment  the 
powers  of  the  board  of  directors,  as  defined  in  the  articles  of  incorpo- 
ration, limited  to  the  management  of  affairs  while  the  company  is  in 
operation,  disappear,  and  they  are  without  power  to  perform  an  act  of 
genuine  liquidation.  We  do  not  think  the  objection  well  founded,  and 
we  do  not  see  how  it  could  be  demonstrated  that,  the  shareholders' 
meeting  having  power  to  vote  dissolution  or  not,  at  its  option,  it  would 
not  have  the  right  to  vote  its  subject  to  a  condition  or  at  a  fixed  time, 
and  we  think  that  it  would  only  be  incapable  of  doing  so  if  a  case 
arose  of  legal  and  hence  obligatory  dissolution. 

But  in  such  a  matter  the  best  arrangement  will  be,  that  which  offers 
the  most  security  to  the  purchaser  and  the  least  opening  for  contro- 
versy. 

It  results,  both  from  the  corporation  law  and  the  articles  of  incor- 
poration, that  the  new  company  is  in  full  control  of  its  liquidation^ 
and  that  it  can  consequently,  by  law  and  by  its  articles,  in  the  plenti- 
tude  of  its  power,  decide  that  its  liquidation  shall  take  place  in  a  given 
form  and  by  a  given  determinate  act.  It  may,  in  a  word,  carry  out 
its  liquidation  at  the  same  time  that  it  decides  upon  it. 

A  meeting  of  shareholders  should  be  called  in  conformity  with  arti- 
cles 61  and  62  to  adopt  the  following  resolutions: 

First  resolution:  The  special  shareholders'  meeting  approves  the 
plan  of  transfer  to  the  United  States  as  the  President  of  the  United 
States  is  himself  authorized  to  accept  it. 

By  this  first  resolution  it  is  the  company  itself  which  binds  itself  in 
the  plenitude  of  its  power  and  in  a  form  which  binds  all  shareholders 
and  which  may  be  set  up  against  all  parties  in  interest. 

Second  resolution:  It  deciders  that,  to  conclude  this  transfer,  the  com- 
pany should  be  declared  to  be  in  liquidation  and  consequently  appoints 
M.  X.,  with  express  authority,  for  it  and  in  its  name,  to  fulfill  all  for- 
malities and  sign  all  papers  necessary  to  carry  out  the  transfer. 

By  this  second  resolution  the  meeting  creates  the  legal  representa- 
tive contemplated  b}T  the  law  in  case  of  liquidation,  and  no  contest  can 
be  made  hereafter  as  to  the  authority  of  its  mandatory. 

Third  resolution:  In  case  modifications  in  the  plan  of  transfer  should 
be  proposed,  the  liquidator  shall  submit  them  to  a  meeting  of  share- 
holders organized  in  conformity  with  articles  33  and  34. 

It  is  prudent  to  provide  for  this  possibility. 


334 


PANAMA    (ANAL  TITLK. 


This  third  resolution  is  justified  by  the  right,  conferred  upon  the 
meeting  of  shareholders  by  article  63,  to  regulate  the  procedure  of 
liquidation,  the  powers  of  the  liquidator  and  the  terms  of  their 
exercise. 

By  this  method  in  dealingwith  the  United  States  the  Liquidator  docs 
not  merely  perform  an  act  within  his  general  powers,  but  carries  out 
a  decision  made  by  the  company  itself  and  which  can  be  sel  up  against 
it,  not  only  as  an  act  which  the  liquidator  had  the  right  to  do,  but  as 
an  act  emanating  from  itself. 

He  does  not  merely  make  a  decision  which  he  would  have  the  right 
to  make  by  virtue  of  his  powers,  but  fulfills  a  precise  and  formal  man- 
date, which  consists  in  carrying  out  an  agreement  accepted  by  the  com- 
pany itself. 

A  contract  made  under  these  conditions  by  the  new  company  with  a 
company,  or  with  any  person  whatever,  would  not  be  open  to  attack 
in  France. 

VII. 

It  ma}^  become  still  less  so  by  making  parties  to  the  deed,  parties  not 
necessary  but  supererogatory,  tin4  only  persons  who  have  a  right,  not 
real  but  apparent,  to  object  to  the  alienation  made  by  the  company. 
We  have  proved  that  it  has  become  the  owner  of  the  assets  which  are 
the  subject  of  the  transfer;  that  as  owner  it  can  dispose  of  them:  that 
by  following  one  of  the  three  forms  above  mentioned  it  will  dispose  of 
them  validly. 

It  lawfully  binds  its  shareholders,  who  are  bound  by  a  decision  of 
the  shareholders'  meeting;  as  to  its  creditors,  it  has  no  other  obliga- 
tion than  to  divide1  the  price  among  them;  as  concerns  the  Compagnie 
Universelle,  it  has  the  right  to  dispose  of  its  assets  upon  condition 
only  of  giving  over  to  it  the  full  share  of  the  price  to  which  it  may  be 
entitled;  its  right  to  transfer  was  recognized  by  the  agreement  of 
December  24,  1901;  the  decision  of  the  arbitrators  of  February  11, 
1902,  settled  the  amount  of  its  claim.  The  whole  has  been  confirmed 
by  decrees  and  decisions. 

Concerning  the  creditors  of  the  old  company  it  has  no  obligation  and 
no  legal  connection;  the  transfer  which  the  latter  made  to  the  new 
company  was  approved  and  has  become  final  by  compliance  with  the 
formalities  of  the  act  of  July  1,  1893.  Further  still,  in  the  procedure 
leading  to  the  decree  upon  intervention  confirmed  by  the  decision  of 
August  5,  1902,  the  representative  of  the  bondholders,  who  alone  had 
power  to  oppose  the  sale,  declared  that  he  approved  the  agreement 
reached  with  a  view  to  the  transfer.  Whence  it  follows  that  the  pres- 
ence of  and  signature  of  the  final  act  of  transfer  to  the  United  States 
by  either  the  liquidator  of  the  Compagnie  Universelle  or  the  repre- 
sentative of  the  bondholders  is  in  no  way  necessary.  * 

Nevertheless,  and  if  it  be  desired  to  push  the  spirit  of  precaution 
beyond  the  limits  of  ordinary  and  sufficient  prudence,  it  seems  easy 
to  make  the  liquidator  of  the  Compagnie  Universelle  a  party  to  the 
contract. 

The  agreement  of  December  24,  1901,  provides  (article  1st),  "the 
new  company  remains  charged  with  carrying  on  the  negotiations.  It 

shall  have  f  ull  powers  to  conclude  eventually  with  the  United  States, 
and  to  fix,  after  discussion  with  it,  the  price  and  conditions  of  the  sale." 


PANAMA   CANAL  TITLE. 


385 


This  agreement,  the  plan  of  transfer  made  in  consequence  by  the 
new  company  for  the  price  of  $40,000,000,  were  confirmed  by  decrees 
of  March  19andJuly3,  1902.  The  liquidator  certainly  finds  in  these 
decisions  the  power  necessary  to  sign  the  final  deed  of  transfer,  and  if 
he  thought  that  he  should  solicit  a  new  confirmation  from  the  court,  we 
may  be  assured  that  the  tribunal  would  not  reverse  itself. 

In  the  same  way,  the  decree  of  August  5,  1902,  being  made  in  a  pro- 
ceeding to  which  the  representative  of  the  bondholders  was  a  party,  he 
has  also  full  power  to  ratify  a  transfer  which  he  could  not  oppose  by 
reason  of  the  decision  made. 

But  the  presence,  at  the  making  of  the  deed  between  the  United 
States  of  Colombia  and  the  new  company,  of  the  liquidator  and  of  the 
representative  of  the  bondholders,  would  have  no  other  merit  than  to 
sanction  a  state  of  things  which  is  settled,  sinc<\  to  r<  j><  at  it  for  the  last 
time,  the  ]>/<!)}  of  transfer  is  henceforth,  by  flu  effect  of  judicial  deci- 
sions which  hare  heroine  r<s  judicata*  not  ojx  n  to  attack  either  by  the 
liquidator  or  by  the  represt  ntatwe  of  the  bondholders. 

VIII. 

To  sum  up,  the  undersigned  counsel  expresses  his  formal  opinion 
that  by  the  transfer  which  the  new  company  might  make  to  the  United 
States  in  one  of  the  three  forms  set  forth  in  Sections  IV,  V,  and  VI  of 
the  fifth  question  the  United  States  will  acquire  the  firmest  and  most 
impregnable  title  of  ownership  to  the  property  transferred  and  will 
assume  no  other  obligations  than  those  stipulated  for  in  the  contract 
of  transfer  itself,  without  any  other  claim  being  possible  to  be  made, 
either  by  the  old  company,  or  by  its  shareholders,  or  by  its  liquidator, 
or  by  its  creditors  and  bondholders,  or  by  their  representative. 

Paris,  September  21,  1902. 

Waldeck-Rousseau, 

Advocate  of  the  Court  of  Appeal. 


O 


■9. 


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